GSK plc (GSK) Earnings

Management highlights

- **Strategic Portfolio Transformation** * GSK is repositioning to become a more specialty-focused growth company, with key priority therapy areas including oncology, respiratory, hepatology, HIV, and vaccines, moving away from its historical reliance on genericizing primary care and commoditized vaccine products. By 2031, the majority of sales will come from the five core priority areas. * Executive leadership conducts biweekly reviews of the late-stage pipeline, led directly by product teams to improve accountability and accelerate decision-making. Since January 2026, this process has identified acceleration opportunities across 7 assets, 18 indications, and 25 clinical studies. - **New Product & Launch Updates** * Extenture (twice-yearly IL-5 for severe asthma): J-code went live July 1 2026, with over 50% of insured patients now covered; 70% of eligible severe asthma patients remain untreated with biologics, leaving large room for growth. * Blenrep (ADC for multiple myeloma): Approved in 49 countries with reimbursement secured in Germany, Spain and the U.K., where it now leads new patient starts in second-line treatment. The J-code is now active, and GSK will focus on unlocking community setting adoption where most patients are treated. Two phase 3 first-line studies are ongoing, with preliminary data expected in H1 2028. * NewValent Acquisition (closed July 2026, net cost £7.1 billion): Gydatro (ROS1-positive non-small cell lung cancer) received FDA approval one week after close; Neldalkib (ALK-positive NSCLC) has an FDA PDUFA decision expected November 27 2026, with first-line study enrollment over 30% complete. - **R&D Acceleration & Pipeline Progress** * GSK's R&D pipeline has more than doubled the number of phase 2/3 assets with blockbuster potential since 2022, and development timelines are 25% faster, placing GSK in the upper quartile of peer performance. 2026 will see the highest number of phase 3 starts in company history. * Oncology: The ADC portfolio (MORES for gynecologic cancers, RISRES for B7H3-expressing solid tumors) is significantly accelerated, with 5 phase 3 studies for MORES and 4 for RISRES starting in 2026. RISRES already has two positive phase 3 trials in China, with the first positive overall survival data for any B7H3-directed ADC, data expected H2 2026. Valsatinib for GIST has two phase 3 studies recruiting ahead of schedule. * Respiratory: Ultra-long-acting TSLP program is accelerated by 9 months, with 6 phase 3 studies starting by end of 2026 across asthma, nasal polyps, and COPD. IL-33 for COPD is phase 3 ready, with first pivotal studies starting next year including a cardiorespiratory outcome trial. * Hepatology: Efemitifermin for MASH has been accelerated, with F4 cirrhotic MASH phase 3 studies initiated. Bepirovirsen for chronic hepatitis B achieved 19% functional cure in phase 3, with regulatory submissions expected late 2026. * HIV: Long-acting pipeline progresses with 3x-yearly treatment (Quattro phase 3 started, approval targeted 2028), 2x-yearly treatment (phase 3 start planned 2028, approval targeted late 2030), and 3x-yearly PrEP (registrational data expected H2 2026, approval targeted 2027), all with robust intellectual property protection extending into the 2040s. * R&D Relocation: GSK is moving its UK R&D hub from Stevenage to the Cambridge Biomedical Campus, co-locating with academic partners and the innovative biotech/AI ecosystem, with full relocation expected by early 2029. - **Accelerate Growth Cost Savings Program** * GSK is implementing a 3-year program to deliver £1.9 billion in annual cost savings by 2029, with a one-time cost of £2.4 billion (£2.1 billion cash). 90% of savings will be delivered by 2028. * Majority of savings will be reallocated to fund R&D acceleration for the late-stage pipeline, with a portion dropping through to strengthen margins during the dolutegravir loss of exclusivity period (2028-2030).

Guidance

- Full year 2026: Sales and core operating profit guidance are now raised to the upper half of the prior range, reflecting stronger than expected performance from HIV (Cabenuva) and Shingrix (vaccines). Core EPS guidance is lowered to the lower half of the prior range due to additional interest expense from the NewValent acquisition. - HIV full year 2026 sales growth guidance is raised to high single-digit growth, from the prior mid-to-high single-digit range. General Medicines full year guidance is downgraded to reflect the current tough market environment and generic competition. - 2026 operating profit growth is expected to be significantly Q4 weighted, due to lapping 2025 Q4 productivity charges, Q3 2026 impacts from NewValent consolidation and acquisition-related interest, and a tough tax comparator. - GSK reaffirms its long-term target of over £40 billion in total sales by 2031, with over 50% of sales coming from specialty medicines. Operating margin through the 2028-2030 dolutegravir loss of exclusivity period is now guided to be stable to improving (up from prior guidance of stable), supported by specialty mix shift, productivity gains, and cost savings from the Accelerate Growth Program. Growth is expected to accelerate from 2031 onwards. - GSK expects R&D investment to continue growing faster than sales, with R&D spend now exceeding £7 billion annually, up over 50% since 2021.

Segment performance

1. **Specialty Medicines**: Grew 14% year-over-year in constant currency, driven by Nucalla (strong COPD launch growth, 69% higher new-to-brand prescriptions in the U.S. with COPD driving over 70% of growth, 18% international sales growth led by China where it holds majority share for bio-naive COPD patients), Cabenuva (long-acting HIV treatment, 33% sales growth), and Dovato. This segment is the core growth driver and is targeted to become an increasingly large proportion of GSK's sales long-term. HIV sales within specialty grew 10% year-over-year, with long-acting injectables contributing 80% of HIV segment growth and 35% of total U.S. HIV sales; Cabenuva sales grew 33% and Apretude sales grew 39%. 2. **Vaccines**: Grew 8% year-over-year in constant currency, driven by global expansion of Arexvy (RSV vaccine), strong meningitis vaccine performance, and Shingrix growth in Europe including a two-year tender win in Australia. Shingrix is also being studied for potential new indications targeting cardiovascular events and dementia risk reduction. 3. **General Medicines**: Declined 9% year-over-year in constant currency, driven by a declining portfolio of older established products, a challenging pricing comparator in the U.S. from a 2025 Q2 positive true-up, and lower inhaled respiratory market demand. GSK expects these headwinds to improve in the second half of 2026.

Risks & headwinds

- Late-stage clinical drug development inherently has attrition risk; even accelerated programs may fail to meet efficacy or safety endpoints. * Kamla Pixant impairment was recorded in Q2 2026 following a negative Calm 2 study readout, and the Camlipixen program for chronic cough failed to meet its endpoint due to an overwhelming Hawthorne effect that swamped the treatment signal. - General Medicines continues to face pricing pressure and generic competition, leading to consistent sales declines; underinvestment to reallocate capital to specialty could further erode its performance. - Competitive risk exists in many high-priority areas, including ADCs in oncology and long-acting HIV products, with multiple competitors pursuing similar indications and some ahead in development. - Net debt increased to £22 billion following the NewValent acquisition, equaling just under 2x 2025 core EBITDA, though GSK maintains a strong investment-grade balance sheet. - Demand stability for mature general medicines products remains uncertain, with higher than expected abandonment rates for products like Tralegy continuing to pressure performance in the first half of 2026.

Analyst Q&A

• Q: Does the new £1.9 billion Accelerate Growth cost savings program raise the long-term 2031 margin target relative to prior plans? /

  A: GSK previously guided margins would be stable through the 2028-2030 dolutegravir loss of exclusivity period. With the new cost savings program, GSK now expects margins to be stable to improving through that period, driven by a growing proportion of higher-margin specialty products and ongoing productivity improvements. No specific long-term percentage target was provided.

• Q: What criteria are used to select assets for acceleration, and why is Neldalkib not on the accelerated list, and does focusing on validated targets increase the probability of success for phase 3 starts? /

  A: Assets are selected for acceleration based on robust supporting clinical data, large blockbuster-level indication opportunity, feasible operational execution, and competitive urgency. Neldalkib was already on an accelerated development track from the NewValent acquisition so it did not need additional acceleration. More than 100 potential acceleration opportunities were narrowed to 7 based on size of opportunity and return on investment. Validated targets with strong supporting biology from early clinical and real-world data increase confidence in success, with close tracking of competitive moves to prioritize assets where GSK can capture meaningful share.

• Q: What is the intellectual property protection for cabotegravir beyond 2031, and can you confirm IP protection for the long-acting HIV pipeline? /

  A: The existing 6x-yearly Cabenuva has additional patent protection granted through 2040. The 3x-yearly treatment formulation has additional patent protection pending through 2047. For prevention, 3x-yearly cabotegravir has secondary patents pending through 2045. The long manufacturing process for the injectable nano-milled product creates additional moats, and GSK expects rapid cannibalization of older products by newer pipeline long-acting formulations, creating sustained value through the 2040s.

• Q: What factors led to the downgrade to General Medicines guidance over the last quarter, and was the CMS agreement a negative surprise? /

  A: The downgrade reflects continued pressure from generic competition and pricing pressure on mature older assets. Higher than expected abandonment rates for Tralegy (a previously double-digit growing asset in the CIT class) have persisted at higher levels than in prior years, which is a trend seen across the entire CIT class. GSK expects these headwinds to ease in the second half of 2026, and the lower guidance reflects the year-to-date weakness. The CMS agreement did not create unexpected negative surprises.