GSK plc (GSK) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate positive sentiment. Specialty medicines and HIV portfolios show promising growth, supported by strong pipeline developments. The 6% dividend increase and strategic focus on operational efficiency bolster confidence. Despite some uncertainties, optimistic guidance and new product launches, such as Exdensur, provide a positive outlook. The market reaction is expected to be positive, with a 2% to 8% increase in stock price over the next two weeks.
Key Financial Performance
Sales Sales were up 5% to more than GBP 7.6 billion. Growth was driven by Specialty Medicines, which were up 14%, with vaccines also contributing particularly through strong Shingrix sales.
Core Operating Profit Core operating profit grew 10%. This was supported by growth in Specialty Medicines and Shingrix sales.
Earnings Per Share (EPS) EPS was up 9%. This was impacted by a higher tax rate and increased finance expenses, partially offset by the benefits of the share buyback.
Cash Generation Cash generation was strong at GBP 1.4 billion. This was partially masked by the impact of adverse currency.
Shingrix Sales Shingrix delivered more than GBP 1 billion in sales, up 20%. Growth was driven by Europe (up 51%) due to uptake in national immunization programs and private market demand, and the U.S. (up 12%) due to inventory movements and the launch of the new prefilled syringe.
Jemperli Sales Jemperli delivered GBP 232 million in sales, up 40%. Growth was driven by significant overall survival benefit in endometrial cancer.
Nucala Sales Nucala delivered double-digit growth following its expansion into COPD in the U.S. last year. U.S. growth was driven by a broad COPD label and the halo effect on other indications. Total brand new patient starts grew 65% year-on-year.
HIV Sales HIV sales grew 10%, driven by the long-acting portfolio and Dovato. U.S. sales grew 15%, with treatment market share outpacing the competition.
Cabenuva Sales Cabenuva grew 31% in Q1, fueled by patient demand and accelerated switches from competitor products, reaching 79% in the U.S. this quarter.
Apretude Sales Apretude grew 44% in the quarter, withstanding impact from a competitor launch.
Gross Margin Gross margin improved 110 basis points due to the growth of Specialty and Shingrix benefiting product mix this quarter.
SG&A Expenses SG&A declined 2%, helped by positive IP settlements. On an underlying basis, SG&A grew 2%, demonstrating P&L leverage and continued productivity improvements.
Royalties Royalties benefited from Abrysvo and Comirnaty income streams.
Free Cash Flow Free cash flow benefited from the $250 million special dividend received as part of the changes to the ViiV shareholding structure.
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Operating Highlights
Nucala COPD, Exdensur, and Blenrep launches: Progress in launching these products, with Nucala showing strong growth in COPD market share, Exdensur focusing on severe asthma with ultra-long-acting dosing, and Blenrep gaining traction in multiple myeloma treatment.
Shingrix: Achieved record quarterly sales of over GBP 1 billion, driven by strong demand in Europe and the U.S.
Jemperli: Delivered GBP 232 million in sales, with significant growth in endometrial cancer treatment.
HIV portfolio: Strong growth driven by long-acting treatments like Cabenuva and Apretude, with new pipeline developments for 3x yearly dosing options.
Bepirovirsen: Positive Phase III data for chronic hepatitis B treatment, with regulatory reviews progressing in the U.S. and China.
COPD market expansion: Nucala capturing significant market share in the U.S., Europe, and China, with strong early signals in China.
HIV market leadership: Continued market share growth in the U.S. and Europe, driven by long-acting treatments.
Shingrix penetration: Opportunities remain in top 10 markets outside the U.S., with only 11% of the eligible population immunized.
Operational efficiencies: SG&A expenses declined 2%, demonstrating productivity improvements and P&L leverage.
Cash generation: Strong cash generation of GBP 1.4 billion, with free cash flow benefiting from a $250 million special dividend.
Pipeline acceleration: Initiated multiple Phase III trials and acquisitions to enhance the late-stage pipeline, including assets in oncology and pulmonary hypertension.
Business development: Acquired RAPT Therapeutics and 35Pharma to strengthen the portfolio in respiratory, inflammation, and cardiopulmonary diseases.
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Risk or Challenges
General Medicines Sales Decline: General Medicines sales declined by 6% in Q1, driven by declining sales of the older established portfolio. Trelegy performance did not offset the broader portfolio decline, particularly due to increasing co-pay requirements in the U.S. Medicare redesign.
Shingrix Sales Challenges: Future sales growth for Shingrix may face challenges due to tougher comparators in Europe and Japan as large immunization programs annualize.
Exdensur Access Limitations: Access to Exdensur in the U.S. is still limited ahead of obtaining the J-code, which restricts its market penetration in the severe asthma space.
Blenrep Accessibility Issues: Accessibility to competitor options for Blenrep remains a challenge, particularly in the U.S. market.
Pipeline Development Risks: The company is making bold investment choices in late-stage pipeline development, which carries inherent risks of clinical trial failures or delays.
Regulatory and Market Access Risks: Regulatory reviews for key assets like bepirovirsen are ongoing, and delays or unfavorable outcomes could impact commercial opportunities.
Economic and Currency Impacts: Adverse currency impacts partially masked cash generation in Q1, which could continue to affect financial performance.
Competitive Pressures in HIV Market: Despite strong growth, the HIV portfolio faces competitive pressures, including from new competitor launches.
Supply Chain and Manufacturing Risks: The divestment of the Rockville manufacturing site could pose risks to supply chain continuity and operational efficiency.
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Guidance & Outlook
Profitable Growth: The company expects another year of profitable growth, as reflected in the guidance confirmed during the call.
Shingrix Sales: Future sales growth is expected to face tougher comparators in Europe and Japan due to annualized immunization programs. However, penetration opportunities remain with only 11% of the eligible population immunized in the top 10 markets outside the U.S.
Nucala Expansion: Momentum in COPD market leadership is expected to accelerate, with strong initial signals in Europe and China. The U.S. market is expected to grow further with the upcoming J-code for Exdensur in severe asthma, anticipated in early July.
HIV Portfolio: The company plans to launch 3x yearly Cabenuva for HIV treatment in 2028 and 3x yearly Apretude for PrEP in H1 2027. Twice-yearly long-acting injectable treatments are expected to launch by the end of the decade.
Oncology Pipeline: Pivotal results for Jemperli in rectal cancer are expected in the second half of the year. Multiple Phase III trials for oncology assets, including Ris-Rez and Mo-Rez, are planned to start this year.
Hepatitis B Treatment: Regulatory reviews for bepirovirsen are progressing well, with a PDUFA date of October 26, 2026, and priority review in China. Commercial preparations are underway in these markets.
Pipeline Development: The company plans to start 10 Phase III trials in 2026, including pivotal trials for oncology, respiratory, and inflammation assets. Key readouts are expected for camlipixant, Exdensur, and HIV prevention assets in the second half of the year.
Capital Allocation: The company remains on track to achieve more than GBP 10 billion of cash flow from operations in 2026, with cash flows weighted towards the second half of the year.
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Shareholder Return Plan
Q1 Dividend Declared: 17p per share
Dividend Growth Expectation: Another year of profitable growth reflected in the guidance confirmed today.
Share Buyback Program: Share buyback is on track to be completed at the half year.
Shareholder Returns: Totaled over GBP 0.9 billion in Q1.
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Key Q&A
Q:Why do around 65% of patients discontinue short-acting biologics in respiratory within the first 12 months?
A:A significant reason is compliance and the requirement for frequent dosing, which varies from every 2 weeks to every 4 weeks. Patients who discontinue often return to inhaled medicines, and some may eventually return to biologics.
Q:What can we expect from the strategy update with the Q2 results regarding the pipeline and HIV business?
A:The update will provide a comprehensive view of the pipeline, focusing on both midterm (to 2031) and longer-term outlooks. The HIV business will be embedded within this update, showcasing the total business progress.
Q:What is the opportunity for bepirovirsen, and how does it vary across regions like the U.S., Europe, and China?
A:The opportunity is significant, with 70% of the market potential between the U.S. and China. In the U.S., the focus is on a concentrated geographic area with high immigrant populations. In China, the market is more stigmatized but has a high desire for treatment. The treated population globally is around 10 million, with strategies tailored for each region.
Q:How does GSK view the potential impact of a once-weekly oral HIV treatment on its long-acting injectable segment?
A:GSK believes the once-weekly oral treatment will primarily cannibalize daily oral treatments rather than impacting the long-acting injectable segment. The injectable segment caters to patients who struggle with adherence, feel stigmatized by daily tablets, or prefer directly observed therapy.
Q:What is the level of excitement and expectations for the CALM-2 data and the acceleration of long-acting injectable HIV treatments?
A:CALM-2 data is on track for publication mid-year, with expectations of a 15%-20% reduction relative to placebo being significant. For long-acting injectables, the FDA requires a Phase II process, and GSK is in dialogue to ensure timely progression, aiming for an end-of-decade launch.
Q:What is the confidence level in achieving a 6-month HIV treatment regime by the end of the decade?
A:GSK has started the Phase II-A program for VH184 and plans to start Phase II for VH499 in the second half of the year. Phase III is expected to begin in 2028, with an end-of-decade launch anticipated based on current regulatory dialogues and trial designs.
Q:How does GSK plan to address the disconnect between its commercial ambitions for bepirovirsen and current consensus expectations?
A:GSK acknowledges barriers like surface antigen testing and diagnosis but believes these will improve with the availability of new treatment options. The company emphasizes the medical value of reducing hepatocellular carcinoma risk and the stigma associated with hepatitis B, supported by expedited designations from regulators.
Q:What is the early launch progress of Exdensur, and how does the J-code impact its market potential?
A:About 70% of Exdensur initiations are from patients switching from other biologics. The J-code is a significant barrier initially but will unlock the majority of the market once available. The U.S. market has a large pool of bio-naive patients, providing significant growth potential.
Q:What is the impact of changes to Florida's ADAP on HIV reimbursement, and could similar changes occur elsewhere?
A:Florida's ADAP changes included restricting access to Biktarvy and Descovy, but a court case reversed the reduction in eligibility thresholds. Other states may also review ADAP for efficiency, but the guideline-driven nature of HIV treatment and community pushback may limit broader changes.
Q:What is the focus of the Q2 business update?
A:The update will focus on the pipeline portfolio, providing greater granularity and depth on data, rather than a comprehensive review of top-line and bottom-line trajectories.
Q:What does GSK mean by accelerating pipeline delivery?
A:GSK is dynamically managing its portfolio by closely monitoring clinical execution, reallocating resources, and fostering a culture of aggressive pursuit of opportunities. This involves direct interaction with team leaders and transparent decision-making to accelerate late-stage assets and create shareholder value.
Q:What is the outlook for Shingrix in the U.S. and China?
A:In the U.S., Shingrix demand is driven by comorbid populations, with inventory levels within typical ranges. In China, administered doses are increasing, but sales numbers may not reflect this until existing stock is reduced.
Q:What is the commercial outlook for Jemperli in endometrial and other cancers?
A:Jemperli's endometrial cancer opportunity is estimated at EUR 1 billion, with colorectal and head and neck cancers contributing another EUR 1 billion. GSK is focused on operational improvements in the U.S. to increase adoption in endometrial cancer.
Q:What is the progress and strategy for Nucala and Exdensur in respiratory treatments?
A:Nucala's growth in the U.S. is driven by COPD, while Exdensur is being positioned as the primary focus for other indications. Exdensur's launch strategy includes leveraging Nucala's resources and addressing patient churn in the biologics market.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers to questions about the label expectations for bepirovirsen and the CALM-1 data, citing the non-registrational nature of certain studies and the need to wait for further data. Additionally, there was a lack of clarity on the broader signals for HIV reimbursement changes in the U.S. beyond Florida's ADAP adjustments.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Apretude
BEHOLD
EC
Exdensur
GBP
HIV sale
III trial
ILD
Japan
MASH
Mo Rez
Nina
ORR
PROC
Pharma
Phase III
PrEP
Rez ADC
Rez combination
Ris Rez
Shingrix product
asset Phase
cancer Mo
cause mortality
cell lung
code
efimosfermin
expression
hepatitis
hypertension
immunization program
launch market
linerixibat
lung cancer
market demand
outcome patient
partner Hansoh
potential dosing
sale portfolio
sale treatment
session
syringe
transaction
velzatinib
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GSK plc (GSK) Q1 2026 Earnings Call Transcript
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The earnings call summary and Q&A indicate positive sentiment. Specialty medicines and HIV portfolios show promising growth, supported by strong pipeline developments. The 6% dividend increase and strategic focus on operational efficiency bolster confidence. Despite some uncertainties, optimistic guidance and new product launches, such as Exdensur, provide a positive outlook. The market reaction is expected to be positive, with a 2% to 8% increase in stock price over the next two weeks.
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Positive2-4
The earnings call summary highlights strong growth in key areas such as Specialty Medicines, HIV, and oncology, along with upgraded revenue and EPS guidance. The Q&A session reveals strategic initiatives, especially in COPD and HIV, and addresses R&D realignment. Despite some concerns over regulatory strategies, the overall sentiment is positive, with strong financial performance and optimistic guidance suggesting a stock price increase.
GSK Slides
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