Roche Holding AG (ROG) Earnings Call Transcript & Summary

Welcome to Roche Third Quarter Results Webinar 2024. My name is Henrik, and I'm the technical operator for today's call. Kindly note that the webinar is being recorded. [Operator Instructions] At this time, it's my pleasure to introduce you to Thomas Schinecker, CEO, Roche Group. Mr. Schinecker, the stage is yours.

Thank you very much, and good morning, good afternoon, wherever you are. I'm extremely excited to share with you the very strong Q3 results with you today. Again, a very strong growth in this quarter. Now year-to-date, group sales are at plus 6% at constant exchange rates, really driven by a strong base business growth of 8%. The COVID effect is still from Q1. In fact, in Q2 and Q3, we had no COVID effect. In both quarters, we're growing 9%. So overall, Pharma doing well with 9% and diagnosis with 8% growth in the base business. So this is a momentum that will carry us forward into the fourth quarter, but also into next year. The COVID-19 sales decreased by roughly CHF 800 million, and the LOE impact was also about CHF 800 million, and both are in line with guidance, and I'll make more comments about that later in the presentation. Q3 was also a very strong quarter in terms of portfolio progress on the Pharma side with 5 regulatory approvals of our medicines, 3 positive Phase III readouts and 2 acquisitions. The 5 regulatory approvals you see here. One is the U.S. approval of Itovebi, and Itovebi was approved 6 weeks ahead of schedule. So really also showing the -- how convincing the data was. Beyond that, we had OCREVUS subcut, Tecentriq subcuts approval in the U.S., EU approval for Vabysmo in retinal vein occlusion and PiaSky in PNH. On the Pharma readouts, we had positive -- 3 positive readouts. I would like to just highlight Gazyva in lupus nephritis. Devastating disease where there are not many very good treatment options. And here with our CD20, we have an opportunity to deliver really a new medicine for these patients. On the diagnostics side, we had 2 important approvals. One is the Respiratory flex. This is based on the TAGS technology that we have developed, which enables, in this case, 12 different viruses to be detected in a single sample, in a single test. And also the cobas pro serology solution, which enters us into the U.S. market for blood banking serology, which is the biggest market in the U.S. And in a lot of parts of the world, in Europe, we've actually gained massive amounts of market share. So I'm really hopeful that we can continue this momentum then also in the U.S. I already mentioned 2 deals. One is the CDKi portfolio from Regor Therapeutics. The other one is the Wnt portfolio, which is a very important pathway in ophthalmology, but also other diseases for AntlerA. And we closed the LumiraDx deal, which has a very innovative technology in point of care, which we really look forward to bringing to patients around the world. There will be some news flow in this year. I would like to call out the SKY-01 data that will come to this year, the trontinemab data and the prasi data. We have still some exciting launches ahead on diagnostics with the mass spectrometry, the i601, fully automated, which will come through this year. The next version of cobas 6800/8800, which, as we know, played a significant role in the pandemic. And here, we have a next update, which will be launched this year. Again, here, just looking at it from a divisional perspective, you can see sales, including and excluding COVID, but really fantastic momentum, I believe, in both divisions that will continue to drive growth also into the future. Here, on the left-hand side, I've shown this slide multiple times now, you can see the group sales development over the last 4.5 years. On the right-hand side, you see the development if you exclude COVID. And this is relevant because the COVID effect will not play a significant role going forward. Now there is one effect in Q4 that I just want to highlight, which is on the Diagnostic side. There was a rapid antigen order in Q4 in 2023 last year and that was roughly around CHF 300 million. And so we'll see that impact in Q4, which is approximately 2% of our sales. So not major. So it's something that we can digest. But as we look into 2025, there will be 0 impact for us on the COVID side. Here, you can see the quarterly development on the Pharma and Diagnostics side. On the Pharma, we see really an acceleration over the last 1.5 years into high single-digit range. On the Diagnostics side, continuously very good growth, between 7% and 8%. So we believe we can also continue with a good momentum going forward. Matt will surely talk a little bit more about the last quarter and some impacts in China. But given the new products that we're launching, we are confident also about the outlook in Diagnostics. Here, you see the key growth drivers of the Roche portfolio in the quarter and going forward. Itovebi, clearly the U.S. approval in the -- the U.S. approval is very positive for us. We look forward to getting an approval in Europe next year. I already talked about Tecentriq subcuts, that approval. Hemlibra, we continue to gain market share, now climbing to 42%. We also have a Phase III enabling readout for the next-gen bispecific called NXT007, which is expected in 2025. On the neuroscience side, we already talked about the U.S. approval for OCRE subcut. And also Elevidys is really starting to accelerate with more than CHF 100 million in sales just in the last quarter. Then going to the left-hand side, going to Xolair, here, again, we see very strong pickup of Xolair for food allergy. We have already more than 30,000 patients on treatment. And we don't expect any biosimilar launches in 2025. On the Vabysmo side, and I know Teresa will comment on that as well, we see a very rapid conversion from the -- to the prefilled syringe in the U.S. And for Susvimo, we're talking several hundred implants in 2024. Diagnostics, we talked about it, very strong base business growth and significant launches that have happened, and that will continue to come up. Now going to the outlook. Again, this year, we have launched 2 new NMEs with PiaSky and Itovebi. And as you can see on the right-hand side, now, the new and young portfolio that's very innovative and that's going to carry us into the next years, is now making up 56% of our overall Pharma sales. So very good momentum with the new products. Here are the key opportunities for growth beyond 2025. Let me just comment on a couple. First, Itovebi with the EU approval that we're expecting next year. Evrysdi, GYM329 readout that we're also expecting last -- next year. And the recent data from Scholar Rock also is quite exciting for us in this regard. And so let's see what will come out of that. Fenebrutinib, we presented at ACTRIMS, the FENopta open-label extension showing near complete suppression of disease activity and disability progression for up to 48 weeks. Again, I think a good indicator here. Gazyva, we talked about the positive Phase III. We're now going to talk to the regulators about these results, and we hope to file next year and get approval as soon as possible. For anti-TL1A, we started Phase III trials in UC. And also we will start soon the Crohn's disease Phase III trial. There will be additional information on further trials. It should be shared in first half of next year. Vamikibart, we expect the readout in '25. And I think we've given plenty of updates on our obesity portfolio, which we continue to believe in very strongly. On the Diagnostics side, I mentioned the cobas pro serology solutions. This is a product that we've had on the market outside of the U.S. for quite some time and have gained a lot of market share in this space. Now this is a completely new market opportunity for us in the U.S. because we've not been on the market. Now we've received FDA approval, and so we can gain some momentum there. I talked about the Respiratory flex test and LumiraDx opportunity as well. So overall, I think we can say 2024 is a very good year for us. We continue to have very strong base business growth, and we believe this will continue in Q4, but also into next year. We do expect the full year COVID-19 sales decline to be CHF 1.1 billion. So the CHF 300 million effect you'll see in the fourth quarter on the Diagnostics side, which was a rapid antigen order last year. And we also believe that we'll have to see what really happens in Q4, but we believe there will be some acceleration in terms of LOE impact in Q4 because of ACTEMRA biosimilar launch. Finally, let me reiterate the guidance, which we have raised at half year on the earnings per share. Group sales growing mid-single digits. And I hope you understand also with the COVID effect in Q4 why we believe it will be in the mid-single-digit range. We have very good cost discipline, so we are confident in achieving our core EPS growth. And with that, we will further increase dividend in Swiss francs. With that, I hand over to Alan to take you through the financials in a bit more detail.

Yes. Thanks, Thomas. And today's a sales call, so I will be brief. So hi to everybody. It's great to see you. As Thomas said, I can fully agree, I think great performance in Q3. Would like to thank everybody who has contributed to this and certainly foremost the employees. We have really done great things for patients. So let's jump into it. First, a little bit of advertising. I think you get used to this in the meantime. We have really done 7 investor events this year. You see that on the lower part of the slide. And we will have 2 more. They are highlighted on the slide I think really next week, we will have a urology event focusing on our Alzheimer's disease pipeline, and that's Phase I, Phase II trontinemab data, which we will present at CTAD. And what does that include? I think it includes new data from Part 1. It includes the cohort 4 at 28 weeks, and we'll show initial data from the ongoing expansion cohorts in Part 2. So it will be exciting. Please take a look at it. And then I think we will close the year at November 25 with the digitalization day. And this will be around really using AI and using digital really in R&D development, especially more on the early side. So Aviv Regev will present and you will see, especially the use case Lab in a Loop. Good. With that, let's go into the numbers. I'm not going to talk a lot about the sales because Teresa and Matt will surely cover that masterfully. We have achieved good sales growth, as you've heard from Thomas, in both divisions, and you see that on the left-hand side. When you put it together, you get to the plus 6% at CER, which you see in the middle of the slide. And then you see on the right-hand side the impact coming from currencies, which is minus 4 percentage points, leading us to a growth in Swiss francs of 2%. I think that's a perfect segue to the next slide. So keep the minus 4 percentage points in mind. So here you see now on the left-hand side, the plus 6%. On the right-hand side, the plus 2% in Swiss francs I've talked about already. And then you see really the major impacts from currencies in the middle. And I think it's pretty evident in our case. The U.S. dollar has the highest impact, followed by the Japanese yen, the Chinese yuan in APAC and certainly the euro. Good. Leads me to the point, okay, what can we expect for full year based on relatively trivial model that we are following? On the left, let me first say you can see the 2024 average currency rates remain below 2023 for both the U.S. dollar and the euro, which means there is additional impact. And when you then go to the right-hand side, and you know what we're doing there, we keep the currency rates end of September 2024 stable until the end of the year and then look at the impact. And you see really for Q4, we expect a minus 5 percentage points impact. When you then look at year-to-date, full year, if you like, the full year in total, we expect a minus 4 percentage points, a minus 6 percentage points on core operating profit and a minus 7 percentage points on core EPS. I think what is a bit encouraging, I think if you look at 2025 and you do the same thing and take today's currencies and keep them stable really over the period of 2025, we would have on sales an impact of minus 2.4 percentage points. Certainly, this is very, very speculative. We will see what's going to happen. But well, you see really what we guess we will end up with. Certainly, I think as we now progress to year-end, this is much more stable compared to the previous quarters. Good. With that, let's go once again to the guidance, and I think Thomas has said a lot. Let me be specific about the core EPS growth because the impact from the resolution of tax disputes in 2023 was a minus CHF 774 million. I think that's important, yes, in the year itself, plus CHF 774 million for 2024, it's a minus CHF 774 million. I think Thomas talked about COVID, the COVID sales, the CHF 1.1 billion. He talked about the loss of exclusivity impact of minus CHF 1.4 billion, which looks conservative at first sight, but includes ACTEMRA. And I'm sure Teresa makes a comment about it. And then I think to be very clear, what have been the COVID sales Q4 2023 that was in Diagnostics is CHF 337 million and in Pharma of CHF 5 million. That's why we are going with surrounded numbers of CHF 300 million approximately, but the Q4 2023 numbers are a fact. That's why I mentioned them. I see we also thought it's perhaps also interesting to make a comment about 2025. And certainly, we're not giving any guidance here at this stage, and we'll do that at our full year press conference. But when we look into 2025 and what we know now, we consider the current growth rates for 2025 that we find in the consensus for sales as well as for core EPS reasonable. That's what we can say at this stage. It looks okay. It's something that we can achieve with. There's still a lot of stuff which is going to happen, and we will change that picture potentially. And especially on the core EPS side because, very clearly, M&A will play a role and how much debt we will have on the balance sheet plays a major role here. So I think we feel okay with the consensus, looks reasonable at this stage. But still, I think there are lots of things that can move around. Good. And with that, I think I hand over to Teresa.

Great. Thank you so much, Alan. Okay. So year-to-date, Pharma delivered 7% growth at constant exchange rates, reaching CHF 34.3 billion in sales. Excluding Ronapreve, we achieved 9% growth at constant exchange rates. All regions, excluding Japan, showed strong growth. I think we can all understand that sales in Japan were impacted by a base effect of about CHF 600 million and Ronapreve sales in Q1 of last year. Excluding Ronapreve, Japan declined at 3% at constant exchange rates, and that's primarily due to mandatory price cuts. Overall, Pharma volumes were up by 14%. Our young best in disease portfolio continues to deliver strong growth led by our innovative brands with Vabysmo, Phesgo, OCREVUS, Hemlibra, Polivy, Evrysdi. Together, they added about CHF 3 billion at constant exchange rates in new sales so far year-to-date. Vabysmo and Phesgo maintain impressive growth trajectories, continuing to exceed market expectations. And as Thomas noted, Elevidys makes its first appearance on this chart. In Q3, it is now launched in 6 countries outside the U.S. and has already generated sales of CHF 137 million so far this year in our international region. So with that quick overview, let's start taking a deeper dive into our individual therapeutic areas, starting with oncology. Oncology sales increased by 2% to CHF 11.9 billion in the first 3 quarters of the year. In terms of key news, we're very excited that Itovebi, also known as inavolisib, received U.S. approval in September for first-line PI3 kinase mutated hormone receptor positive breast cancer. That is, as Thomas mentioned, more than a month ahead of the PDUFA date and was really based on that strong INAVO120 data that showed a doubling of PFS. Itovebi approval was our first step towards expanding our breast cancer franchise into HR-positive breast cancer. And as you heard at Pharma Day, we have a broad and innovative development program in this area that we recently augmented via the Regor deal that added the CDKi portfolio to our pipeline. I'll expand on both Itovebi and the Regor deal in the subsequent slides. But before we move on, let's take a quick look at our on-market HER2 franchise. Again, the HER2 franchise outperformed market expectations, KADCYLA delivering 6% growth and Phesgo 58% growth year-to-date. The Phesgo global conversion rate continues to climb, reaching 43% in Q3. That's up from 41% just last quarter, and this positions us extremely well for a conversion rate of more than 50% by 2026. Moving on to Tecentriq. There were 2 Q3 developments that we'd like to highlight. So as Thomas mentioned, the subcutaneous formulation received U.S. approval, and we are also very happy to report that we had positive Phase III data, the IMforte trial in extensive-stage small cell, which further underlines the strong clinical profile of Tecentriq in small cell lung cancer. And finally, before we move on regarding the outlook, I just want to confirm that we continue to expect the SKYSCRAPER-01 final OS results for tiragolumab next -- by the end of this year. So moving on to breast cancer. The Itovebi approval in the U.S. not only came earlier than expected, but we were also granted a very strong U.S. label. All endocrine-resistant patients are included, not only those developing endocrine resistance within 12 months of endocrine therapy. We expect EU approval in the first half of 2025, and we look forward to making this transformative medicine available to more our patients. I'm also pleased to share that Itovebi received Chinese breakthrough designation and priority review. As you can see at the treatment paradigm on the right hand of the slide, the additional studies with Itovebi will expand the addressable patient pool within PI3 kinase mutated hormone receptor positive breast cancer. With INAVO120, 121, 122 and 123 combined. We are convinced that Itovebi has a peak sales potential of more than CHF 2 billion in HR-positive breast cancer alone. And please remember beyond these trials, we are also actively looking at other tumor types where PI3 kinase mutation plays a significant role. This slide on the left also highlights our on-market portfolio and in development breast cancer portfolio. For those of you who joined us at Pharma Day, you will recall that breast cancer is perhaps our furthest along end-to-end disease area with both a strong on-market presence as well as an ongoing expansion into hormone receptor positive breast cancer. And while you're very familiar with our oral giredestrant, which we do expect Phase III data in next year, I did want to talk a little bit more about the CDK4/2 portfolio that we acquired with Regor. So we're extremely excited about this addition into our breast cancer portfolio. The lead asset from Regor is called RGT-419B, and it's currently in Phase I. As you can see on the slide, RGT-419B is a highly potent CDK inhibitor that also inhibited CDK. Importantly, currently available CDK inhibitors do not show a significant activity against CDK. And we believe that this MOA may help set RGT-419B apart from currently available options by addressing a key mechanism of resistance. While the molecule is currently completing its Phase I trials, we're already moving rapidly to think about ways to expand it into other development options, and this will include Phase II combinations with endocrine therapy, but importantly also combinations with Itovebi in hormone receptor positive breast cancer as well as in combination with giredestrant. We're very excited for the potential that this portfolio recommends -- that this portfolio brings, including the Phase I ready RGT-587 molecule. And we're excited to continue to provide you updates and to bring these to patients with urgency. Moving on to hematology. We had a strong growth in hematology of 12% in Q3, and we now stand at CHF 5.8 billion in sales. So let's start with Hemlibra. Hemlibra U.S. EU5 patient shares further increased to 42% this quarter, and we've now treated over 27,000 patients globally. We saw a very strong U.S. Q3 performance due to a buying pattern reversal that had negatively affected us in previous quarters. We can now confirm that the NPS trends are back on track and that we are looking at the low to mid-single-digit sales growth for the U.S. for full year that we had talked about at the beginning of 2024. At the same time, we remain on track to achieving mid-single-digit growth globally in 2024 for Hemlibra. Quite exciting, I think, is also our follow-on next-generation bispecific in hemophilia A, NXT007. We did share some preclinical data at Pharma Day that gives us confidence in NXT007's potential, specifically the potential to achieve 0 treated bleeds without the need for Factor VIII treatment. So please stay tuned for the Phase III enabling Phase II data, which we expect will read out next year. So switching over to malignant heme. Polivy's launch keeps on reaching new milestones. We now have 35,000 patients treated globally, and U.S. patient share in first-line DLBCL has climbed to 28%. I'd like to highlight that we will be presenting a 5-year OS data for Polivy in first-line DLBCL at the upcoming ASH conference in an oral presentation. In addition, the launches for both of our bispecifics, Columvi and Lunsumio, are on track and progressing as expected with strong uptake in their initial indications. Additionally, there are some important regulatory updates for both that I wanted to share. Columvi's positive Phase III STARGLO results in second-line DLBCL have been filed with global regulators, and we're excited about the potential of moving Columvi into earlier lines of therapy. And for Lunsumio, the positive results for the subcutaneous formulation in third-line follicular are expected to be filed later this year in the U.S. and the EU. This new formulation builds on the benefits of the available IV formulation, including the need for no hospitalization and a fixed duration of treatment, but is expected to ease administration and has the potential to require less steroid use. We are excited to bring subcutaneous formulations to patients, and we believe that the combination of moving Lunsumio to earlier lines of treatment in follicular lymphoma and DLBCL with data that we'll be expecting next year in addition to the subcut formulation can really help realize its full potential. So now let's move on to neurology. Our neurology franchise continues to deliver strong growth of 14% at constant exchange rates, achieving CHF 7 billion in sales by Q3. OCREVUS strong growth momentum continues at 9% driven by all regions. Furthermore, the Ocrevus Zunovo subcutaneous formulation achieved approval in the U.S. after receiving its EU approval last quarter. Zunovo offers all of the benefits that we've come to expect from Ocrevus in terms of a strong clinical profile and every 6-month dosing, while further easing administration burden. We're confident that this is going to expand OCREVUS footprint in the MS market and that we will see Zunovo as an incremental CHF 2 billion sales opportunity. Already, we're seeing very promising first signals about the uptake of Zunovo in the U.S. with about 80% of our new patient starts beginning on Zunovo being new to brand and not switches from Ocrevus IV. We expect this strong momentum to persist into the last quarter, meaning high single-digit growth for Ocrevus for the full year. MS, as you know, is one of our end-to-end disease areas. And therefore, it's also great to see the progression of our oral BTK fenebrutinib is making good progress. We see, as I believe Thomas mentioned, positive data from the Phase II FENopta study was presented at ACTRIMS showing near complete suppression of disease activity and disability progression for up to 48 weeks. And as a reminder, the ongoing Phase III trials are expected to read out in 2025. Moving on to SMA. Evrysdi had strong year-to-date growth of 21%. It remains the global market leader for SMA with more than 16,000 patients treated. As expected, Q3 came in a little softer than Q2, and this was due to a onetime tender effect in the international region that we mentioned last quarter. We also showed the 2-year RAINBOWFISH data, which was presented at World Muscle and showed sustainable efficacy -- sustained efficacy and safety in newborns with presymptomatic SMA. Going back to Elevidys, the first approved gene therapy for DMD, has now been used to treat in more than 50 patients ex U.S. And let me just say, this is such an amazing milestone. These boys and their families are in so much need, and it's really tremendous to see how quickly we've been able to get Elevidys to patients. We also recently presented muscle MRI outcomes from the Phase III EMBARK study at World Muscle, and the results are consistent with the benefits seen for the EMBARK functional secondary endpoints. So continuing to see a good body of evidence building up for Elevidys. On the outlook, there are 3 key items to cover here in neurology for trontinemab in AD, the updated Phase I/II data will be shared at CTAD. So this data set will contain safety data for an additional 100 patients from the extension cohorts and longer efficacy and safety follow-up for the first 60 patients, which had originally been presented earlier in the year at AD/PD. As communicated before, we expect to have sufficient data on trontinemab in AD by the first half to make a decision on taking this molecule into pivotal Phase III trials. And as Thomas -- I'm sorry, as Alan mentioned, there's also an IR event at CTAD on the 31st that we would encourage you to join. The Phase II PADOVA readout for prasi is also expected in Q4. And as a reminder, we consider this high risk, but also high reward. And also the interim readout for the Phase II Evrysdi plus GYM329, which is our anti-myostatin and SMA was moved into 2025 as was communicated in Pharma Day. But again, with the new data from Scholar Rock, I think we remain excited about what that trial could show. And so with that, let's move on to immunology. Total half year sales for immunology reached CHF 4.6 billion, which represents a 1% increase at constant exchange rates. As Thomas mentioned, the key highlight is certainly the positive Phase III data here for Gazyva in lupus nephritis. The study met the primary endpoint of complete renal response, demonstrating superiority over standard of care. We will be sharing these results with global health authorities in the near term. And beyond lupus, Gazyva is also in development for many other diseases of the kidney, and there are 3 Phase III trials in SLE, MN and INS, with the SLE data expected in 2025. And that study just recently achieved LPI this quarter. Equally exciting is the ongoing launch of Xolair in food allergy. I think we shared with you how bullish we were on Xolair's opportunity to have a strong impact on families facing food allergies. We now have roughly 30,000 patients on treatment for food allergy, and Xolair achieved an overall Q3 growth rate of 12%. We do expect further growth acceleration in the remainder of 2024. And for 2025, this growth momentum is expected to continue to deliver a year-over-year growth rate for Xolair in the mid-teens. And as Thomas mentioned earlier, we do not expect a U.S. biosimilar launch in 2025. For ACTEMRA, you will notice that we are continuing to grow 5% year-to-date. That's driven by sales in the chronic indications. At the same time, we do know that biosimilars are coming for ACTEMRA, and the launches in the U.S. and EU were frankly just slower than were expected. And that's not only by us, I believe that's by the market as well. And last but not least, let's quickly talk about our anti-TL1A in immunology. This quarter, we initiated the Phase III trials in UC, and we expect to initiate the Phase III Crohn's trials in the Q1 of next year. And as Thomas mentioned, we are also working on starting additional trials in this indication, which will be announced in the beginning of the year. Up next is the ophthalmology franchise. Performance here continues to be strong with the franchise reaching CHF 3 billion in sales with an impressive growth rate of 47% at constant exchange rates. The franchise is led by Vabysmo, which continues to expand its U.S. market shares. Compared to last quarter, the AMD shares increased by 3 percentage points to 30% in DME, 3% -- I'm sorry, the AMD shares increased by 3% to 30%; DME, 3% to 22%; and RVO by 5% to 20%. At the same time, we see that our new to brand share is about 50% naive patients, which is up from around 40% in earlier quarters. There's still more growth to come. In September, we launched our next-generation prefilled syringe in the U.S. And already, we're seeing about 80% conversion, clearly indicating that HCPs are very eager to use this simplified one-handed administrative option. We're working to bring the prefilled syringe to the EU as well, where filing is currently ongoing. Moving on to Susvimo. Our AMD commercial relaunch in the U.S. is underway. And let me give you an idea how we're tracking progress with Susvimo because I think this comes up quite a bit. The way we think about it is that in 2024, we're targeting several hundred implants. In 2025, we're targeting several thousand implants. And in 2026, we target a range of roughly about 10,000 implants. Focusing on driving implants at this point in the launch is really the goal because that sets patients up for actually getting therapy going forward. And already, we can see that patients that have one implant are highly interested in getting one for the fellow eye. About 50% of our new implants since relaunch are actually for the fellow eye. In terms of outlook, the Phase II readouts for vamikibart, as we mentioned at Pharma Day are in 2025, and this will help inform our future development. And this completes our look at our on-market franchise. But of course, there is one key in development franchise that we certainly would like to highlight. And here, I wanted to share our continued efforts to strengthen our pipeline in obesity. This is a slide you saw at Pharma Day a couple of weeks ago, and you've also heard a lot of detail about the obesity pipeline at EASD. So I'm only going to briefly touch on a couple of details here. In Q4 of this year, we expect additional Phase I data from CT-388, from cohort 13 in type 2 diabetes and patients with obesity. This data is expected to be overall confirmatory and as such is planned to be presented at a conference in 2025. Beyond this, no further readouts are planned for 2024. For 2025, the focus is on early Phase II data for CT-868 in type 1 diabetes as well as additional Phase I data for CT-996 in type 2 diabetes. So now let's take a step back and take a high-level look at the pipeline overall. So here, I just want to highlight our continued efforts to strengthen the Pharma pipeline. You saw this slide in my half year presentation. And in Q3, again, we had some turnover in the NME side. We removed 8 NMEs, 3 in oncology, 1 in neurology, 4 in infectious disease and 1 in immunology. One of these is what we would call a happy removal. PiaSky has been approved to PNH, so it's no longer an NME in our pipeline, but moves over to our on-market portfolio. And on the other hand, 3 NMEs were added, 2 in oncology and 1 in neurology, and this includes the Phase 1 CDK from Regor as well as an LTBR antagonist in solid tumors. So as we prepare to wrap up, let's have a quick look at our 2024 key newsflow slide. You can see here that we've added quite a few green checks since what we showed at half year. And we've added some additional 2024 newsflow below the table. All the new entries in the table below it, I've covered on previous slides, so I'm not going to rehash here. But let me just quickly remind you that the one Phase III readout that we are awaiting in 2024 is the final OS readout for tiragolumab in first-line non-small cell and then the additional data for prasi and tronti. And one last quick slide before I hand over to Matt. Here, we have the expected newsflow for 2025, which we also shared at Pharma Day. And there are quite a number of long anticipated regulatory and clinical events that are anticipated in 2025. I'm just going to highlight a few of them. The giredestrant Phase III results in first-line HR-positive metastatic breast cancer; Lunsumio and Polivy in Phase III readouts in second-line DLBCL; the Ocrevus high-dose Phase III in MS; the fenebrutinib Phase III in MS; the astegolimab Phase III in COPD, these are all significant potential market opportunities and potentially game-changing for their further therapeutic areas. And we also have multiple Phase IIs reading out, which will enable Phase III decisions. That includes tronti, which we've talked about before; NXT007 in hemophilia and zilebesiran in uncontrolled hypertension. So I'm sure you can understand that we're very much looking forward to next year and sharing with you along the way the results of all of these important trials. But for now, I'm going to hand it over to Matt to take us through the Diagnostics section.

Thanks, Teresa. So it's my pleasure to present the Q3 Diagnostics division sales results, and let me start with the year-to-date top line. So with sales of CHF 10.7 billion, the Diagnostics division increased at 5% or CHF 0.6 billion at constant exchange rates compared with year-to-date September 2023. Now this increase is mainly driven by the strong base business growth of 8% and partially offset by the decline of COVID-19 testing sales. So for 2024, as I've said before, we have an ambition for mid- to high single-digit base business growth, and I would continue to reinforce our confidence in the base business performance and in achieving this ambition. This is an ambition we will carry forward into 2025 as well. And so as you heard from Alan and Thomas, I would call out that in Q4 2023, we did have a government order of COVID-19 rapid antigen tests that will not repeat in Q4 of 2024. So with that, let me walk you through the sales results by customer area. So sales in our core lab increased at 9%, with strong momentum driven by immunodiagnostics at plus 10% and clinical chemistry at plus 8%, as well as custom biotech at plus 5%. Our molecular lab had an increase of plus 4% due to strong growth at our virology base business at plus 12% and our blood screening -- molecular blood screening business at plus 15%. This was offset by lower COVID-19 PCR lab-based testing sales. However, excluding all COVID-19 sales, our molecular lab grew strongly at plus 8%. Now our new customer area, near patient care, had a decline of minus 10%, mainly due to lower COVID-19 rapid antigen testing, as you see on the slide, and the decline of our blood glucose monitoring business by minus 5% due to the market shift to continuous glucose monitoring. Now we did receive CE Mark for our own CGM solution, the Accu-Chek SmartGuide in July, and we're continuing with the staggered launch across selected European countries. However, we do not expect material sales contribution from CGM in 2024 and 2025 as we are currently scaling up our manufacturing. However, we do have strong expectations for this product in the future. Sales in pathology lab grew strongly at plus 15%, mainly driven by advanced staining reagent growth,at plus 11% and by our personalized health care business or companion diagnostics business at plus 35%. So now I'd like to take a step back and do the regional view on the commercial performance. Excluding the COVID-19 business, we see good base business growth across all our regions. Now in North America, the base business, excluding COVID-19, grew at plus 10%. In EMEA, the base business, excluding COVID-19, grew at plus 6%. In APAC, the base business excluding COVID-19 grew a plus 5%. And here, I'd like to call it what you heard from Thomas earlier. We did see the anticipated slowdown in our sales in China due to the macroeconomic situation, which we expect to continue through 2025. I would call out that China is still a critical market for us, and we continue to be the market leader. Now additionally, I would -- as I mentioned earlier, given the strength and resilience on our base business, our ambition to grow mid- to high single digits in our base business will carry forward into 2025. So now, I'd like to transition to some of the key launches for 2024. First, I'd like to talk about our cobas pro serology solution, which will enable us to enter the serology testing segment of the U.S. donor screening market. This segment constitutes more than 40% of the global serology market, which is valued at approximately CHF 900 million. Our cobas pro solution is a combination of the cobas pro integrated e 801 and 9 Elecsys donor screening assays as well as a new software solution, the cobas pro serology controller. Now altogether, this solution is critical for our success in blood safety in the U.S., as Roche can now offer the full package of nucleic acid testing, serology and workflow automation, putting us in a very differentiated position in this critical market segment. And now I'd like to move on to another exciting bit of innovation in our R&D pipeline, which is the recent FDA self-collection approval for the cobas HPV test. So in the United States, over 13,000 new cervical cancer patients are diagnosed and about 4,000 die every year. This disease is entirely preventable through timely screening. However, 30% of eligible women do not get screened regularly. So individual, cultural and health system factors have been identified as primary barriers to the uptake of cervical cancer screening. Now with HPV self-collection, we can now offer women the option to privately collect their own sample in health care settings. So across countries in multiple clinical studies, self-collection has been shown to nearly double the likelihood of participation in screening programs and especially in underscreened populations. So this will enable market penetration of this already critical parameter in our molecular diagnostics portfolio. And I would also call out that this takes advantage of our large installed base of X800 fully automated molecular diagnostics platforms, which are widely disseminated across the United States. And so now sticking with the theme of innovation in molecular diagnostics, I would like to speak about another key innovation in this portfolio, the Respiratory flex, which brings flexible syndromic panel testing to the existing X800 installed base. We received CE Mark for the cobas Respiratory flex in August of 2024. So the Respiratory flex leverages our proprietary TAGS technology. Now this is an acronym called temperature-activated generation of signals, a technology that enables us to identify up to 15 targets within a single PCR well in a single patient. This assay will enable custom target panels on the X800. This allows health care systems to customize the pathogens targeted with the panel and enables customized patient-centric panel testing. So by automating this on our X800 family of instrumentation, we now have the capability to offer automated syndromic panel testing in time for the 2024 Northern Hemisphere respiratory season. And so lastly, as you also heard Thomas mentioned, we completed the acquisition of LumiraDx in July of this year. And we're looking forward for the full integration of LumiraDx within our near patient care portfolio. So LumiraDx is a multimodal technology that can perform clinical chemistry, immunoassay and, potentially in the future, molecular diagnostics in a multiplex format on a single -- consumable on a single instrument. And LumiraDX's attributes have broad applicability across decentralized health care and have the potential to enhance access to testing in low and middle-income countries. So while we do not expect immediate material contribution to sales from LumiraDx, we expect a significant contribution to the Diagnostics divisional sales in the coming years. And so now I'd like to conclude with the key launch list for the Diagnostics division. I think you've heard at some of our earlier calls this year, this is one of the biggest years, if not the biggest year for launches that we've had in diagnostics. For the 12 launches, you see on this slide, we achieved 9 by Q3 of 2024, and we plan to deliver the remaining launches on schedule by the end of 2024. So I look forward to providing future updates on our progress in the future. And with that, I would pass it back to Thomas. Thank you very much.

Okay. Thanks. With that, we open the Q&A. And the first questions go to Emily Field from Barclays.

I will ask two. The first is on Vabysmo. I was just wondering if you are expecting any impact from the at-risk launch of Amgen's biosimilar EYLEA to impact dynamics in the United States. Do you expect this to impact your share of switches? And then on Tecentriq, I believe on the media call this morning, there was a headline noting that you had said that sales had peaked. Consensus does have this franchise continuing to grow for the next few years. So I was just wondering if you could provide a bit more context for those comments. Should we think about Tecentriq as flat, declining? Any additional color would be helpful.

Sure. So starting with your first question on the Amgen biosimilar launch of EYLEA, so let's just remember the dynamics of this market to begin with. So the ophthalmology market has been about 50% generic biosimilar with Avastin and Lucentis biosimilars available. We would expect that the dynamic will continue to play out. We are not anticipating to see any material impact to Vabysmo's growth trajectory with EYLEA biosimilars entering. We have a highly differentiated product and one that offers, I think, a very compelling benefit to patients. So I think we would expect that 50-50 dynamic to continue to be the case. We are not seeing any payers at this juncture implement biosimilar step-throughs. And so we remain quite confident in the future growth potential for Vabysmo. Regarding Tecentriq, so I think my comments this morning were that we actually expect Tecentriq to continue to grow low single digits for the next year or so. We are starting to reach peak in some of our indications. Right now, I think consensus is something like CHF 4.3 billion for Tecentriq. That's pretty close to what our own internal estimates are as well. The place where I think we are beginning to feel the competitive pressure, we've said this before, is adjuvant lung in the U.S. We are actually quite holding our own here right at the moment. So I don't think that we should assume that Tecentriq has already peaked. I think there will continue to be growth. And this is pretty consistent with the messages that we've been delivering for the last couple of quarters.

Emily, any additional questions? And we will move on. The next one would be Matthew Weston from UBS.

Bruno, can you hear me?

Yes.

So two questions from me, please. Thomas, again, referring to the media call, it was reported this morning that you said you think the FTC should block the Novo-Catalent transaction despite having no exposure at Roche. I guess, it's very unusual for an executive to comment in such a way. So I very much enjoy understanding the color to your thinking and why you made those comments. And then secondly, a number of times on this call, both Thomas and Teresa have highlighted Xolair, no biosimilar entry assumed in 2025. I think we were expecting a November '25 launch. Are there any specifics around your view? Is there a settlement? Is there a legal barrier that you think is particularly there? Or is it simply competitive intelligence on the biosimilar time line?

Okay. Let me answer the first question regarding media call. I was asked around manufacturing for our specifically the CT-388 because the overall molecule is a small molecule, so we have all of the manufacturing capacity that we need. And here, we have agreements with CDMOs and -- or CMOs and -- yes, and we will continue to build up our own manufacturing. Now I think, in general, if companies start buying up CMOs, that will limit the amount of competition that there can be given that there are also a lot of smaller companies that may not have as much access to CMOs as we have, and that's where my comment came from. And I stand behind that. I think it doesn't make sense from a perspective from antitrust authorities who wants competition.

And in terms of Xolair, we can't be more specific, but I can confirm that there will be no biosimilar entry in 2025.

Matthew, any additional questions, follow-on questions?

Yes, I'm just going to push on Xolair. So no comment because something legal is in the pipeline, we'll never understand or just a confirmation full stop.

You will understand at some point, I assume, but probably not today. .

Yes. That day won't be today.

So then the next question would come from Megan Dobson from Goldman Sachs.

This is James Quigley from Goldman Sachs. I've got two, please. So firstly, on Elevidys, the pretty strong quarter with a bit over CHF 108 million sales thereabout. So how did this compare to your expectations? Which countries are you seeing the most traction in so far? And then how are you expecting this to develop in the coming quarters with respect to payer feedback as well? And my second question is fenebrutinib in MS. In the back of the presentation, you said the primary end points are CDP at 12 weeks and annualized relapse rate, whereas in CT.gov, it's still just annualized relapse rates. And perhaps, firstly, have you adjusted the primary endpoint of the trial? And if so, why you've highlighted the confidence in efficacy if you see a similar directional result as the other BTK inhibitors with the CDP benefit and an ARR largely neutral versus Aubagio? What could be the regulatory implications here? Could you still get approval in RMS if we were to see this type of result in the trial?

Great. So for Elevidys, we are primarily approved in the Gulf states right now, so that is where we're seeing a large number of patients being treated. And interestingly, we are seeing what we call sort of health tourism with families with these boys actually going to countries where there is approval to have their children treated. So we have 4 of the 6 countries approved, have patients with either treating or in screening. And 4 of the 6 countries actually also got the same expanded label as the U.S. Overall, when you include the U.S., we have about 500 patients that have been treated globally, and I would say this is very much in keeping with what we had hoped to see. We do believe that there's a significant amount of unmet need held up for these boys and their families. We see payers being very sympathetic to the situation that these families find themselves in. And so we're very pleased with the adoption that we're seeing at the moment. For fenebrutinib, and I'm sorry, I had a little bit of a difficult time understanding the question. So we're very pleased with the results that we have seen so far and with the improvement that we're seeing in ARR at 46 weeks -- 48 weeks, rather. And we -- at this juncture, we do not have plans to change the primary endpoint.

Got it. The question was more referring to the back of the slide. This isn't a primary endpoint is both disease progression and ARR. So again, that's probably where the confusion lies.

Okay.

James, does it answer all your questions? Or do you have any follow-on questions.

No. It had been answered.

Okay, yes. Then we go on. Next one in the row is Luisa Hector from Berenberg.

A couple, please. On the neuro pipeline, I wonder whether you could just talk a little bit about the return of the asset to UCB. And then perhaps just to highlight to just what specifically we should be looking out for in both the trontinemab data at CTAD and then prasinezumab by the end of the year. What would be a good outcome for each of those? And Alan, you mentioned M&A in the context of 2025 earnings, obviously being an unknown. Could you just update us on capacity for deals and whether you are focused primarily on achieving perhaps more of that end-to-end of the disease areas that you talked about at the Pharma Day?

Great. So for UCB, the decision to return the asset was one based on business reasons and portfolio prioritization. We still remain very committed to the tau pathway. So there's no -- nothing more behind that decision. In terms of trontinemab, I think we want to continue to see the strong efficacy that we've seen in terms of plaque removal and the consistent and very clean safety profile that we've seen with tronti. And I think should we continue to see that profile, I suspect you'll be hearing us talk about moving into Phase III trials quite soon in the first half. In terms of prasi, really, the trial is designed to demonstrate a slowing of motor deterioration in patients with Parkinson's. And so what we would really hope to see is a greater than 5-point improvement in the MDS-UPDRS, sorry, it does not roll off the tongue. But that is the primary endpoint, that very unique time to event primary endpoint. And I think if we can see that, we do believe that, that will be clinically meaningful.

Luisa, does that answer your questions?

We have one more.

The M&A topic is open.

The M&A one, Bruno.

Yes, happy to do this, Luisa. Very fair questions. Not much of a change here to what we have said previously. I see very clear, we have capacity for deals. I think that's clear. When I look back to 2023 and the 3 deals we have done there, probably, I think -- really, I think nobody would argue that, that was not a success with the TL1A I think really with Carmot, certainly also with zilebesiran. So I think really, a good characteristic here while having something like that in 2024, it was certainly great with other -- certainly with other compounds and other targets here. Will there be a focus on the therapeutic areas? We've talked about it at Pharma Day, so I think that's one element here. And certainly, I think we also keep an eye on Diagnostics, so as you've seen with the Lumira deal. And overall, I can say, yes, we -- while our radar is running, we remain opportunistic, if you like. But as I said, I think 2023 is perhaps a good pattern that we would like to follow.

Okay. Next one is Peter Welford from Jefferies.

So just first of all, I want to start on the myostatin if I can, the GYM329. You made a comment that you're very encouraged by the Scholar Rock data earlier. I guess, curious if you could just talk a little bit about that study because, I guess, firstly, I believe I'm right in saying that you are looking at ambulatory and nonambulatory patients in your study. And so I guess, how that potentially could impact the read across. And also, are we still right in saying that the -- what we get next year will be the Phase II part of the trial. So very much a dose finding. And can you give us a time line potential when could we actually get the efficacy and the read, I guess, from that, given, obviously, now we see clear evidence from Scholar Rock that there does appear to be an effect from the disease? Secondly, then just on returning back to trontinemab for Alzheimer's. Curiously, you've reiterated several times now that the Phase III go decision, if you call it that, will be in the first half of next year. I guess, curious about should we take from that, that what we're going to see at CTAD concludes that some of the higher doses in the earlier cohorts are encouraging enough that you want to see the follow-up safety data from them. Because, I guess, you already have the follow-up data from a lot of the initial groups. And so I guess, what is the initial information you need, I guess, to make that Phase III go decision, if that makes sense? And then finally, sorry, if I could just ask on Elevidys. Any way at all you could quantify -- do you think there's any warehouse in effect here at all? Or when we look at this, I guess, the risk is here, consensus extrapolate the ramp that we see. Is there anything you would say to us to dissuade us from looking at the -- what we're seeing with Elevidys sales over the first 3 quarters?

Yes, sure. So maybe I'll start with question 3 and work my way backwards. So with Elevidys, I think that, certainly, there are families who are in -- who have been anxiously awaiting these approvals and are waiting for their opportunity to receive this treatment. We do believe, though, just sort of the way that the labels will ultimately get approval, and the way that we will actually be able to bring this treatment to market is it's not likely to see that huge bolus that you might think of with gene therapy and then a big fall down because sort of everybody has been treated. We do believe that there is going to be sort of more of a longer steady revenue flow just because of the age ranges, the different types of patients that we would treat, the way in which the approvals will happen. And so I think we're fairly confident that this is going to be a sustainable business for a while. In terms of what we would need to see for trontinemab, we're going to wait for data from 200 patients and then take the decision. Again, we're very pleased with what we see so far in terms of the rates of plaque removal, area rates remaining low. And we will hit the data that we need to hit by the first half of 2025. And so we're excited to be able to get all the data in-house and actually make that decision. In terms of the SMA trial, so you are correct, this is a Phase II trial of GYM329 in combination with Evrysdi. We do expect data from this trial next year. And the reason that I think we are excited about it is that the Scholar Rock molecule antibody is fairly similar to the GYM329 antibody. And so I think we're excited by what they've seen and hope that we will actually see a read across to our own molecule. So more to come. We've got a little bit longer to wait, but we're eager to see those results. It is important to note that in general, SMA and FDSH are actually more challenging diseases to see benefit in because they are not -- they don't have as much myostatin. And so there's -- these are just going to be a little bit more challenging patients to actually see a benefit in. But we're hopeful based on what we know about our own molecule and what we've seen in competitive data. I'm sure that there is at least one person on hold who is waiting to ask the question. So then what does this mean for our study in obese patients? So as you know, we currently have a dose-ranging study going on right now with our anti-myostatin in overweight and obese patients. That data will read out by the end of the year. We are not planning to release that data, but it will inform a Phase III go decision next year.