AstraZeneca PLC's (AZN) Q1 2021 Results - Earnings Call
AstraZeneca PLC (NASDAQ:AZN) Q1 2021 Earnings Conference Call April 30, 2021 6:45 AM ET
Company Participants
Pascal Soriot - ED and CEO
Dave Fredrickson - EVP, Oncology Business Unit
Ruud Dobber - EVP, Biopharmaceuticals Business Unit
Marc Dunoyer - ED and CFO
Mene Pangalos - EVP, Biopharmaceuticals R&D
Susan Galbraith - Oncology R&D
Cristian Massacesi - SVP, Late-Stage Oncology R&D
Leon Wang - EVP, International and China President
Conference Call Participants
Peter Welford - Jefferies
Tim Anderson - Wolfe Research
Simon Baker - Redburn
Sachin Jain - Bank of America Merrill Lynch
James Gordon - JPMorgan
Richard Parkes - Exane BNP
Mark Purcell - Morgan Stanley
Emmanuel Papadakis - Deutsche Bank
Andrew Baum - Citi
Keyur Parekh - Goldman Sachs
Luisa Hector - Berenberg
Matt Weston - Crédit Suisse
Naresh Chouhan - Intron Health
Michael Leuchten - UBS
Sam Fazeli - Bloomberg
Seamus Fernandez - Guggenheim
Steve Scala - Cowen
Operator
Pascal Soriot
Hello, everyone. Pascal Soriot here, CEO of Astra Zeneca. Welcome to the First Quarter 2021 Conference Call and our Webcast for investors and analysts. As always, the presentation was posted to astrazeneca.com earlier today. And we also sent it out via email.
So please turn to Slide 2. Both Slide 2 and Slide 3, those are the usual Safe Harbor statements including one on Alexion, Alexion being Slide 3. We will be making comments on our performance using constant exchange rates, or CER. Core financial numbers and other non-GAAP measures including total revenue and core EPS excluding any revenue or profit impact from the COVID-19 vaccine for pandemic herein. A reconciliation between non-GAAP and GAAP data is contained in the results announcement. All numbers used are in million U.S. dollars and they refer to first quarter of 2021, unless stated otherwise.
And finally, similar to quarters we need to be a little bit more limited with financial guidance due to the ongoing work with Alexion. I hope you understand, so thanks for your understanding.
Please turn to Slide 4, we plan to review the presentation first and then do Q&A until 1:15 PM UK time. We need to end on time due to shareholder engagement here and starting after this meeting in lieu of a physical version of meeting, which is not allowed due to the current COVID-19 restrictions.
If you keep your questions short, we will try to keep answers short too. [Operator Instructions] There's also an option to ask questions through the webcast. We ask you to please ask one question only, and thank you for your help with this.
In speaking order, I'm joined by Dave Fredrickson, EVP for the Oncology Business Unit; Ruud Dobber, EVP for the Biopharmaceuticals Business Unit; Marc Dunoyer, our Chief Financial Officer; Mene Pangalos, our EVP for Biopharma R&D; and then again Dave to cover Oncology R&D before handing back.
For the questions, we also have Pam Cheng, EVP for Operations and IT; Leon Wang, who is our EVP responsible for China and the Emerging Markets. We also have Susan Galbraith, and Cristian Massacesi, who are both VP in charge of Oncology R&D. We plan to first take questions on the ongoing business and then we save any questions on the vaccine for the last part of the conference during the webcast. We hope that it works for everyone.
Please turn to Slide 5. This is the agenda, where we plan to cover all key aspects of our results today.
If we move to Slide 6, 2021 started well. The 11% increase in revenue was boosted by sales of the COVID-19 vaccine for pandemic use. The revenue used for guidance excluding the COVID-19 vaccines for pandemic use was up 7% this year, and it was helped by stocking last year, of a low to mid-single digit percentage for the very first quarter of last year. If you remember, it was very strong growth. And therefore, we estimate that the longer life revenue growth being double digit, low double digits in the first quarter as part of our full year guidance.
Oncology increased by 16%, and new CVRM by 15%, Respiratory & Immunology was down by 4%, impacted by last year stocking of medicines by us [ph] in the quarter and also the launch of the authorized generic of Symbicort in the United States. Emerging markets were up by 10%. Core operating profit grew by 34%, supported by other operating income, with a tax rate of only 8% due to the divestment of the ownership of Viela. Core EPS increased by $1.63, and was up by 53%. There was a negative impact of $0.03 per share from the pandemic vaccine.
We continue to roll forward in our pipeline, and we supported this today, but importantly for [Indiscernible] and it is anticipated to pick up in the second-half of the year.
On the COVID-19 vaccine for pandemic use we shipped and invoiced 68 million doses in the first quarter, with supply increasing. And therefore, that is supported by a very dedicated team here, but also, we've got collaborators around the world. A very quick note, what you see here is what we AstraZeneca invoice, ship and invoice, 68 million doses. Our total production was much higher than these, for our global network of partners. As you know, we've established a global network and we have many sites, manufacturing partners in vaccine. The good start of this year supported reconfirmation of our full year guidance.
Please turn to Slide 7. Looking at the pipeline news flow since February. Just a few highlights. First of all the approval of Tagrisso [ph] in lung cancer in China and the positive [ph] opinion in the EU. There were a couple of regulatory cleanups with Imfinzi and Koselugoit withdrawn. Importantly, Phase 3 for our readouts were positive with the German readout for Lynparza, Lynparza in breast cancer but also from the nirsevimab immunization against the R&D, the respiratory syncytial virus. We will detail this news flow later.
First on [indiscernible] upcoming news flow with a pickup in activity in the second half of the year.
Turning to Slide 8, our current pipeline, showing current headlines. We now take a deeper dive into revenue. Total revenue increased by 11% in the first quarter. The COVID-19 vaccine for pandemic use contributed 4% to growth clearly marked here with revenue growth excluding the COVID-19 vaccine for pandemic use at 7%. And double-digit when adjusting for stocking in the comparable period last year. There was a negative impact from COVID-19 on Brilinta. But the new medicines added over $800 million in new sales particularly the key oncology medicines leading the way. So COVID created a negative headway on a number of products across the pipeline. And of course, we have these negative effects here as you see on Brilinta.
But overall, [ph] we have accumulated first of all past four quarters from those medicines and we have 13 new medicines now that contribute to growth. And our further diversification to all of U.S. as we look at it.
Please turn to Slide 9. Aggregating medicines into these areas, we have solid double-digit growth for oncology and new CDI, with respiratory immunology down by 4% mainly, as I said before, due to stocking last year. Although that has since continued to decline slightly as we become less dependent on the medicine. I have to say that there was an effect of stocking by Congress [Indiscernible] negative headwind in the first quarter this year, on products like [Indiscernible] due to due to COVID. So I don't expect here that some of these impacting those products in the first quarter.
As promised last quarter full details are provided here on the COVID-19 vaccine for pandemic use. From the original viewpoint there was growth everywhere with U.S. seeing the biggest vaccine impact. The emerging markets are back the largest regions, as you can see on the slide. And so in summary, a good start in 2021 despite some headway due to COVID, and we talked about guidance to Q1 last year. And our performance supports our full year guidance. We continued making progress in all these areas and key medicines. And that really reinforced our strategic decisions and our focus over the past year as well as my commitment to continuous - continuing this whole new level.
With the global revenue mix, and our diversified portfolio of new medicines with more to come. AstraZeneca remains really well positioned in the current situation.
If we turn to Slide 10, a few words on Alexion. We've made very good progress here. And we are moving towards closing in the third quarter. Since February, we received the important U.S. SEC clearance, as well as other regulatory clearances with a product that is available on our website. Alexion continues to offer a compelling scientific and business complementarity and it will allow us to be leaders in rare diseases and in immunology.
In the short, and the medium term, the combined company will offer first of all, important stability and cash flow, and that will sustain our positive strategy goal since 2013.
I will now hand over to Dave, to go into details in oncology. Thank you very much. And Dave, please go ahead. Please turn to Slide 11.
Dave Fredrickson
Thank you, Pascal. We're pleased to report a strong growth in total revenue of 16% for the oncology business, now the $3 billion in the quarter. COVID did continue to have an impact as we still see fewer cancer patients diagnosed and treated. But despite this, we saw resilience in our business as sales grew across all of our new oncology medicines from regional expansions and new launches.
Please turn to Slide 12. Starting with our lung cancer franchise, we're pleased to report that both Tagrisso and Imfinzi showed strong growth in the year at 13% and 17%, respectively, with revenue of $1.2 billion and $556 million. We saw a notable impact in non-small cell lung cancer diagnosis rates due to COVID.
Tagrisso continues its global rollout and is now approved in 89 countries in the first line setting, and 17 countries in the adjuvant EGFR-mutated setting. U.S. Tagrisso revenue was up 12%, where we saw continued single digit demand growth, as we start to focus now on bringing Tagrisso to patients with earlier stage lung cancer.
In China, sales were impacted with the usual stocking impacts, following the first line NRDL inclusion, which took effect on the 1st of March this year. The majority of Imfinzi revenue continued to come from the U.S., where we saw a prominent impact from COVID. Despite the launch of CASPIAN indication and extensive stage small cell lung cancer.
Outside of the U.S., we continue to see the revenue of Imfinzi pick up, particularly in Europe and the emerging markets, as we're now able to provide Imfinzi to more small cell cancer patients globally. The unique ability to combine with both cisplatin and carboplatin chemotherapy will further benefit patients.
Please turn to Slide 13. Lynparza continue to demonstrate progress with sales up by 33% with over half of sales coming from outside the United States. This is a result of growth across all regions as more breast and ovarian cancer patients gained access to Lynparza in the major regions of the U.S., Europe and Japan.
U.S. sales continue to grow by 28%, with increases in demand as Lynparza maintained its leadership in the PARP inhibitor market in both ovarian and prostate cancers, as we launched the PAOLA-1 indication front-line, HRD-positive ovarian cancer and the profound prostate cancer indication.
Europe sales were up by 33%, as more first-line ovarian cancer patients received Lynparza, as we now look forward to the ovarian PAOLA-1 and prostate launches in Europe.
Emerging market sales grew by 54%, driven by the China launch and the recent inclusion in the NRDL. Japan sales amounted to $42 million, with growth of 17%, driven again by uptake in ovarian and breast cancers.
Please turn to Slide 14. I'll turn now to the newer launches Calquence in chronic lymphocytic leukemia and in HER2 and 3rd line, HER2 positive metastatic breast cancer. I'm pleased to report the Calquence revenue of $209 million in a year, almost exclusively in the U.S., as the CLL launch continues to take effect.
We're pleased to announce that Calquence is now used in four in 10 new patient's starts, in the frontline CLL BTK setting in the U.S. The launch feedback continues to be very encouraging, and as the impressive head-to-head data versus the incumbent BTK inhibitor reinforce our beliefs and a potential best-in-class medicine. We look forward to bringing Calquence to CLL patients in Europe and Japan, following the recent approvals that happened at the beginning of 2021.
Following the in HER2 launch at the beginning of the year, we're pleased to have reported $40 million in total revenue based on $81 million of global sales ex-Japan booked by Daiichi Sankyo and AstraZeneca in the quarter. And HER2 is the most prescribed medicine in the third-line setting of HER2+ metastatic breast cancer.
I'll now turn you over to Ruud, for an update on our biopharmaceuticals business and emerging markets. Please turn to Slide 15.
Ruud Dobber
Many thanks, Dave. Today I'm pleased to talk to you about the biopharmaceuticals business. Total revenue of biopharmaceuticals comprising new cardiovascular renal metabolism and respiratory immunology was $2.9 billion in the quarter, growing at 4% despite the COVID pandemic.
Starting with new CVRM, revenue was up by 15%. This total revenue of $1.3 billion is continued strength from Farxiga. Farxiga maintained growing market share globally with high double digit volume growth across all regions, as the fastest growing SGLT2 inhibitor outgrowing the SGLT2 class globally, in the U.S., Europe and Japan.
In the U.S., Farxiga grew 60% driven by the initial indication in heart failure. Outside the U.S., we saw strong performances, particularly in Europe as growth of 36%, as volume driven growth increasing and China benefiting from the NRDL listing.
Please turn to Slide 16. Turning to Respiratory & Immunology, we reported revenue of $1.5 billion, increasing at 4% in the quarter, mainly due to one of Symbicort authorized generic in the United States, COVID impact for Pulmicort in China, and COVID stocking in quarter one, 2020.
Symbicort sales were $691 million, with the decline of 50%, mainly due to the stocking and inventory build last year. The U.S. saw a decline of 40%, however, underlying demand growth continues. Globally, Symbicort remain the leader in value and volume market share in the ICS/LABA class.
Europe and Japan continue to see headwinds due to generic competition, whereas emerging markets were up 3% to $165 million. Pulmicort was down 18% in the quarter with revenue of $330 million, which continues to be impacted by COVID, particularly in the hospital treated patients in China. We continue to focus on growing revenue of Symbicort, as well as Breztri, following the successful addition to the NRDL.
Please turn to Slide 17, now I will focus on the new launched medicines. Fasenra contributed $216 million of revenue in the quarter, a strong growth despite COVID-19 with the majority continued to come from the U.S., Germany and Japan. In the United States, Fasenra continued as the leading novel biologic up by 30% with $165 million in revenue. Fasenra maintained its position as the dominant IL-5 blocking medicine in total asthma prescriptions in the top seven countries.
Europe and Japan revenues were $63 million and $26 million, respectively, as Fasenra continues to be the leading novel biologic medicine for severe uncontrolled asthma. The launch of Breztri for COPD is progressing well, with revenue of $27 million in the quarter. Breztri is now approved in 34 countries, including in the EU, U.S., China and Japan, for the treatment of patients with COPD.
As we look to kidney disease, Lokelma achieved potassium binder market leadership in the U.S. Revenue in the quarter was $33 million predominantly from the U.S.
On Roxadustat, we reported revenue of $41 million in the quarter coming from China. As of January 2021, AstraZeneca started recognizing the overwhelming majority of Chinese revenue as product sales, following an amendment to the existing license agreements. We will continue to work closely with our collaborators on the next step for roxadustat in the U.S., following the additional analysis sent to the FDA and with the anticipated advisory committee in July. We now expect regulatory decision in the second-half of 2021.
Please turn to Slide 18. Emerging markets where revenue grew by 10% in the quarter, continue to track ahead of our long-term performance ambition, which is to grow sales on average by mid to high single digit percentage. Outside China, total revenue was up by 11%, with growth spread across the regions.
China delivered resilient growth at 10% and continue to see some impacts from Pulmicort, as well as some stocking due to the recent NRDL inclusions. We look forward to the new NRDL inclusions taking effect throughout the year.
New medicines grew by 30%, contributing over a third of total revenue in the region, with a strong performance driven by oncology and New CVRM.
With this, I will hand over to Marc. Please turn to Slide 19.
Marc Dunoyer
Thank you, Ruud, and hello, everyone. I want to take you through our financial performance in the first quarter of 2021. Please turn to Slide 20. As always, I will start with the reported P&L before commenting on our core results.
As Pascal mentioned earlier, total revenue and product sales grew by 11% in the quarter, this included $275 million of COVID-19 pandemic vaccine sales. Excluding the vaccine, total revenue grew by 7%, and product sales grew by the same number.
Please turn to Slide 21. Turning to the core P&L, the gross margin ratio was 74.6% in the quarter, impacted by the dilutive effect from the COVID-19 pandemic vaccine sales. Similar to quarter four 2020, we saw a favorable mix effect, including more oncology sales being offset by the higher profit share from our collaborations.
We also saw an impact in China related to recent NRDL and VBP updates on pricing. We anticipate this dynamics on the gross margin percentage to continue over the course of 2021, with some liability between quarters. The gross margin percentage in total will continue to be heavily impacted by the ongoing pandemic vaccine sales, as a result of our not-for-profit commitments.
Core R&D expenses increased by 18%, partly driven by a higher number of Phase III programs, and increased investment in the pipeline, including Camizestrant or oral SERD.
In addition to our ADC collaborations with Daiichi Sankyo, we also continue to invest in new platform such as cell therapy NEP genetics [ph]. Expenses related to brazikumab are booked in R&D, but get reimbursed via other operating income.
Part of the increased R&D costs were related to the development of the vaccine, and we also incurred costs for various measures in order to keep our employees safe. Core SG&A expenses increased by 7%, an increase of about $200 million versus same quarter last year, partly driven by continued investment in China.
However, as a percentage of total revenue, SG&A cost were down from 34.3% to 32.8%, and we continue to anticipate SG&A cost to decrease over time as a percentage of total revenue.
Core other operating income more than doubled, driven by the divestment of our shareholding in Viela Bio to Horizon Therapeutics. We also recorded the divestment of Crestor European rights to Grünenthal in the quarter. The core operating margin increased from 29.2% a year ago to 34.5%, held by the divestments.
The divestment of holdings in Viela Bio represented a non-taxable gain, and we also had some settlements relating to prior period liabilities that were settled with tax authorities, resulting in a core tax rate of 8.1% in the quarter. Excluding these benefits, the underlying core tax rate would have been around 20%. We continue to expect the full year tax rate between 18% and 22%.
Our core EPS was $1.63 in the quarter. There was a small negative impact of $0.03 per share from the pandemic COVID-19 vaccine. Small impacts from the pandemic vaccine commitments are expected quarter-to-quarter in both directions, over the cycle of delivery and monitoring of the safety of the vaccine over time.
Please turn to Slide 22. Our core operating profit surpassed the $2.5 billion mark this quarter, helped by Viela divestments. Collaboration revenue will increase over time, and income from this divestment will remain the material part of our P&L, some of our perishable medicine could be where this better suited in the hands of other companies. However, as a percentage of total revenue, divestments are expected to decline over time.
Net debt remains stable in the quarter, despite the dividend payment of $2.5 billion, which reflects our improving cash flow profile. Reported EBITDA grew by 29%, compared to the same period last year. Similar to quarter four 2020, we saw working capital benefits in Q1 related to the COVID-19 vaccine, which was reversed in due course. We're holding 12-months net debt to EBITDA ratio is now under 1.4.
Please turn to Slide 23. This is a familiar slide by now showing the progress we are doing, converting revenue growth into profit and cash flow growth. The ratio of core operating profit expenses - sorry, operating expenses to revenue remained stable at 57%, and core operating profit increased by 34%, helped by the strategic divestment mentioned previously.
Cash flow from operating activities increased by $1.8 billion, compared to the same period year last year. And we also saw a sequential improvement versus quarter four, 2020. The continued profitability will help us deleveraging, and we have previously communicated that we also have the ambition to raise our dividend.
Please turn to Slide 24. Our assumptions for the full year have not changed, and our 2021 guidance remains unchanged. I would like to remind you that our guidance is based on constant exchange rate. It does not include any revenue or profit impact from the sale of the COVID-19 pandemic vaccine, or any impact from the proposed acquisition of Alexion.
Please turn to Slide 25. We remain very excited about the proposed Alexion acquisition. As we have acted previously, the case for both scientific and business complementarity is clear, and it allows us to expand into new and broader indications in immunology, and to bring Alexion life changing medicines to new markets where Alexion is not present today.
On top of a strong C5 franchise, Alexion has an exciting pipeline, including potential new medicine for the treatment of Wilson disease, geographic atrophy, and several important renal diseases.
We passed an important milestone earlier this month, when we received clearance from the U.S. Federal Trade Commission. We are still awaiting clearances from a number of other jurisdictions, but remain on track for an anticipated closure of the transaction in the third quarter. And we are looking forward to welcoming our new colleagues at Alexion onboard.
Thank you for listening. And with that, I will now hand over to Mene. Please turn to Slide 26.
Mene Pangalos
Thank you, Marc, and hello, everyone. I'll be discussing our COVID-19 efforts and updates on our biopharmaceuticals medicines since the last quarter. I'm also joined by Dave Fredrickson, who will discuss oncology movements and upcoming news flow across the company.
Please turn to Slide 27. We're now over a year into the ongoing COVID-19 pandemic, and while medical science continues to change the course of disease, the global pandemic is clearly far from over. As you know, tragically 3 million people have died around the world and the number of infections globally continues to rise.
At the beginning of the pandemic, AstraZeneca has been committed to having an impact on this global health emergency. This includes setting up diagnostic testing, repositioning our existing therapies where possible and delivering two new programs, our long-acting antibody combination is AZD7442 and our COVID-19 vaccine AZD1222 developed in collaboration with the University of Oxford.
Our Phase III trial has confirmed the vaccine's robust efficacy, including its ability to protect recipients against severe disease. This is also reconfirmed in the real world setting across millions of patients, showing that our vaccine is playing a crucial role in preventing illness, keeping people out of hospital and saving tens of thousands of lives.
We've delivered 68 million doses of vaccine in Q1 from our direct supply network, and as of today almost 300 million doses through our extended supply chain, including production from sublicensees, such as the Serum Institute of India. Patients' safety is of the utmost importance to AstraZeneca, and we continue to evaluate all available data to better understand any rare adverse events, including the very rare thrombotic thrombocytopenia events being reported as our vaccine, as well as other COVID-19 vaccines.
We remain confident that the benefits of our vaccine outweigh the risks. We're excited to have the first data from our long-acting antibody programs AZD7442 very soon. And it's increasingly important to have different options for patients when considering protection against COVID-19. And we're confident that AZD7442 will have a critical part to play in the fight against the pandemic. Passive immunization with AZD7442 will offer immediate protection against the virus, potentially for up to 12-months, and is therefore suitably placed as both the prevention and treatment option against COVID-19 disease.
Please turn to Slide 28. Now to briefly show some of the potential new medicines that will drive transformations in cardiovascular, renal and metabolic diseases that our scientists discussed as part of our well received biopharmaceuticals event that we held on 25th of March. The event was an opportunity for us to showcase the breadth and depth of our clinical programs, and to illustrate the variety of modalities that we're working on, in order to provide meaningful benefits to patients across the CVRM space.
For a deeper dive into any of these programs across both CVRM and respiratory & immunology, I encourage you to watch the replays of the event at astrazeneca.com/investors.
Please turn to Slide 29. Now turning to nirsevimab, our long-acting antibody with the potential to provide immunity directly to infants, and offer immediate protection against Respiratory Syncytial Virus or RSV, across an entire season with a single dose.
RSV is an incredibly common and contagious pathogen, causing seasonal epidemics of lower respiratory tract infection, including bronchiolitis and pneumonia. It is the leading cause of hospitalization in infants worldwide. With these highly impactful positive results from MELODY, nirsevimab becomes the first potential immunization to show long lasting protection in the general infant population, the population which has been chronically underserved. And we look forward to bringing this important immunization to patients very soon.
Please turn to Slide 30. I'll now update you on progress made in early-to-mid stage pipelines. Since the last update, our IL33 monoclonal antibody MEDI3506 has now started Phase IIb trials in diabetic kidney disease. Our FLAP inhibitor AZD5718 has completed Phase IIa trials in coronary arterial disease. And as a reminder, AZD5718 is also in Phase II trials in chronic kidney disease.
We also recently announced a new Phase III trial called DAPA-MI, which will evaluate Farxiga in the treatment of myocardial infarction. In respiratory & immunology, AZD1402 has now started Phase II trials in asthma that's our inhaled anti IL4, and AZD4604 becomes a second of our inhale JAK inhibitor strength the clinic in Phase I trials, also for the treatment of asthma.
Our bispecific fusion protein MEDI7352 has started Phase II trials in osteoarthritis pain. And finally, Fasenra has commenced Phase III trials in bullous pemphigoid, a rare autoimmune disorder that results in blisters, hives and itching. And I look forward to updating you on the progress of all of our medicines in the biopharmaceuticals pipelines in months to come.
I'll now hand over to Dave, and please turn to Slide 31.
Dave Fredrickson
Thanks, Mene. So, as I kick off this section, which is normally a section that Jose would have done, I'd be remiss not to acknowledge how shocked and sad we all are by Jose's passing. I think that we could very much argue that Jose Baselga was cancer's fiercest competitor, and I speak on behalf of an organization that says that he gives us all the inspiration to help take his place in the battle against this disease that affects so many.
Please turn to Slide 32. We're dedicated to continuing Jose's legacy and being a champion for the treatment of breast cancer using innovative science. Lynparza continues to deliver unprecedented outcomes across multiple tumor types. And now most recently in breast where OlympiA was recommended to move to early analysis, and reporting have crossed the superiority boundary for invasive disease survival.
With this, Lynparza has the potential to transform the management of early breast cancer for patients whose disease possess a BRCA mutation. We eagerly look forward to ASCO, where the data will be presented for what we think is likely the new standard-of-care for patients.
Discussed extensively at this year's AACR, AZD5305 is pioneering a new frontier of PARP inhibition. It's selected from PARP-1 whereas the first generation of medicines are dual PARP-1 and PARP-2 inhibitors. This selectivity has the potential to address some of the hematological adverse effects seen with existing PARP inhibitors, meaning it's well placed to deliver clinical benefits not only as a monotherapy, but importantly in combination.
And within HER2, we continue to expand its clinical trial program across a range of breast cancer tumor segments, including HER2 low and earlier disease. The next anticipated data readout will be DESTINY-Breast03 in the second-half of this year.
Please turn to Slide 33. This slide is an illustration of our bold ambition to redefine the treatment of breast cancer with our portfolio of innovative medicines, that have first-in-class or best-in-class potential. Our aim is to again become a leading player in breast cancer, with five foundational medicines, Lynparza and HER2, capivasertib, our AKT inhibitor, camizestrant our next generation SERD, and datopotamab deruxtecan, our TROP2 directed antibody drug conjugates.
A late breaking oral presentation for TROP2 and triple negative breast cancer has been accepted at this year's ASMO Breast Medical Congress. As you can see, our medicines have the capability to address the largest segments of breast cancer and some medicines such as HER2, also have the potential to define completely new segments, such as the HER2 low population.
To support this vision, an industry leading clinical trial program is planned to test these medicines across multiple breast cancer subtypes and stages, both as monotherapies and novel combinations.
Please turn to slide 34. Looking now to movements and updates across our mid-stage oncology pipeline, AZD5305, our new PARP-1 selective inhibitor mentioned earlier will now enter Phase I. This quarter we also announced DESTINY-Breast09 the first Phase 3 trial for an HER2 and firstline HER2+ breast cancer patients, and these trials join the new Phase III trials for camizestrant, and datopotamab deruxtecan announced last quarter. I look forward to updating you on these and other movements and progressing throughout the year.
Please turn to Slide 35. I'll end by taking you through the news flow still to come in 2021 across our entire pipeline. In oncology, we anticipate regulatory decisions for Tagrisso and adjuvant and non-small cell lung cancer in the EU, as well as Lynparza in second line prostate cancer in China. Key data readouts include the PROpel trial for Lynparza, PACIFIC-2 for Imfinzi, and DESTINY-Breast03 for HER2 in the second-half of the year. Key submissions will include the aforementioned OlympiA data for Lynparza in breast cancer.
In biopharmaceuticals, we will soon complete regulatory submissions for tezepelumab in severe asthma, and expect regulatory decisions for anifrolumab and lupus and for roxadustat, and Farxiga in renal indications.
In terms of data readouts, we'll have results from PT027s DENALI and MANDALA trials and asthma, and Farxigas deliver in heart failure with preserved injection fraction.
I'll now hand it to Pascal for closing comments. Please turn to Slide 36.
Pascal Soriot
Thank you, Dave. Can you move to Slide 37, this is the summary and I will try to be fast so we can move to the questions? As you can see, as you heard, our sales increased by 11%. If you exclude the impact of our vaccine, the sales grew by 7%. However, as said before, the quarter one last year was a very strong quarter due to stock accumulation.
And if we correct for this event, our [Indiscernible] in Q1 really being low-double digits, so very strong performance. And it was seen across oncology growing 15%, CVRM 15%, respiratory disorders here impacted by COVID, and as a result was down by 4%, and the emerging markets were up by 10%.
Our core operating profit as Marc said grew by 34%, and our EPS helped by the divestment of their share was $1.63, up 53%. There was a negative small negative impact of the $0.03 per share from the pandemic vaccine, and as Marc said this way, there will be ups and downs and small ones quarter-to-quarter with this vaccine.
Speaking of the vaccine, we shipped and invoiced 68 million doses in the first quarter. But importantly, for our extended network of partnerships, we actually produced and shipped 300 million doses so far until the fourth week of April. So really from production that is gaining steam around the world.
So, with this very strong very good start of the year, and we can reconfirm our guidance for the full year. And with this, we now open to the Q&A [Operator Instructions]. So perhaps we can take the first question from the conference call, and it's Peter Welford of Jefferies. Peter, go ahead.
Question-and-Answer Session
Operator
Q - Peter Welford
Hi, thanks for taking my question. I'll start with the pipeline, if you got Mene please, I guess Mene maybe say on camizestrant. Sorry, go ahead.
Pascal Soriot
Go ahead, Peter. We can hear you.
Peter Welford
It's a pipeline question, I guess to Mene or perhaps Dave on camizestrant, please. I am wondering if you could talk a little bit about your Phase II trial that you are running versus Fulvestrant. Is that designed with the superiority study? Or are you just trying to shed an inferiority, I think the number of doses being tested? Or is this regulatory pathway likely to be a Phase III first line? Or is it possible there's another trial could potentially be a regulatory enabling?
And what are the gating factors that could potentially trigger you to consider starting early breast cancer, adjuvant setting trials in camizestrant? When could you get data in-house to make that decision? Thank you.
Pascal Soriot
Thanks, Peter. Maybe we could, if you could answer that or cover this one. Is that okay? Susan, I think you are online, so could you cover this question?
Susan Galbraith
Well, I can start maybe Cristian can carry on. So the Phase II trials, the dose ranging Phase II trials in the future is designed to, as you say, test different doses and has a PFS endpoint. It's not designed to be a registrational study. And I'll ask Cristian to cover the registrational program that we have.
And in terms of what we're looking for in order to trigger early breast cancer, I'd point to a couple of other things in the program. We have an ongoing window of opportunity study in the early stages of breast cancer, which is looking for the pharmacodynamic endpoint across a range of doses, and helps to confirm the confidence that we have in the dose that we've got going forward in the Phase III in early-stage testing. And obviously, we continue to look at the safety and efficacy across our program.
Perhaps, Cristian, if you could just add on the question of the design.
Cristian Massacesi
Thank you, Susan. Thank you, Peter, for the question. We have shown Peter the data with camizestrant and efficacy, tolerability profile that we have specifically at the dose of 75 milligram that we are bringing in Phase III show that this has the potential to be a best-in-class asset.
PFS 11-months, clinical benefit today is more than 50%. No dose reduction or discontinuation for adverse events. And then our investigators are telling us that they are really pleased for completely absence of GI toxicity and no flashes with the [Indiscernible].
We announced that we started the first Phase III trials, setting up for in front line in combination with carbocycline [ph] that is carbocycline [indiscernible]. And we'll announce soon additional trials, additional registrational trials for the moment in metastatic setting. And then, as Susan was mentioning, we are assessing the opportunity to move the drug early in an inadequate patient population in the right setting.
Pascal Soriot
Thank you, Susan and Cristian. The next question is from Tim Anderson of Wolfe Research. Tim, over to you.
Tim Anderson
Thank you very much. I have a question on Tagrisso, and just the cadence of sales by geography. In the U.S., penetration is high, we see a leveling off of sales. And I'm wondering when that might start to happen in other geographies that you break out, such as Europe or emerging markets. There's some big consensus numbers out there, but sometimes products like this kind of come to a halt more quickly than expected just because they ramp up so fast.
And then digging into China a bit more, as you look forward, can you talk about what you expect to see with the Hansoh Pharma competitor EGFR product? We're going to get that data at ASCO. They are on the market and second line in China. And they're going to be pursuing front line in China as well. My guess is that it creates kind of a 2023 NRDL issue for you. So what do you expect from that program and from other competitors in China more broadly?
Pascal Soriot
Thanks, Tim. And Dave, maybe you could cover those, and including the Chinese situation, and possibly Leon could add also, because it's an important question, of course [indiscernible]. Over to you Dave.
Dave Fredrickson
Thanks, Pascal. So Tim, in terms of the cadence that we're seeing, I think it's important to note that we saw good growth in the quarter over the same period last year, across all of the regions. China being actually the lowest of those, but that is a direct result of the NRDL impact that we had in this quarter in the stock compensation. I'll come back to China a bit more specifically in a second.
Maybe I'll just use this as an opportunity to talk very briefly about the U.S. performance on Tagrisso. Tagrisso in the U.S. has certainly been affected by the lowering number of lung cancer diagnoses in the U.S. We think it's about 30% lower today, in this quarter that was at the pre-COVID baseline. And that's certainly been a substantial headwind.
With that said, the duration of therapy that we're seeing in the metastatic setting has been strong. And the fundamentals in the adjuvant setting that we're seeing are also strong. We're seeing good growth and awareness, good growth and message recall. We're seeing patients getting referred from physicians to medical oncologists. We're seeing testing rates go up. And I think that we should expect to see that continuing in Europe, where we just got positive CHMP opinion and ADAURA. And I also think that we will have an opportunity to continue to get frontline growth across the globe.
In China, specifically, we had a really nice uptick in demand following the NRDL inclusion, that uptick in demand only for one quarter for the quarter of March, it's offset by the pricing impacts not only the lower price in March but the stock compensation that we needed to take for two of the months. But I'm quite confident that we're going to see top line growth in China, since you've got over two times the number of patients in frontline.
And then lastly on your question about Hansoh, I mean, obviously we're as interested in seeing the data as you are. It does sound based on high level results, that PFS will be shared, it'll be important to see what data they share on overall survival. It will also be important to see what sort of CNS insights we can get. That's an important part of the clinical rationale in Tagrisso.
I agree with you, I think that most likely scenario would be if approvable based on a PFS endpoint, that would be approval in the second-half of this year, which would be NRDL inclusion in the back in December of '22, or coming in 2023. And we're working really hard to stay in front and use our first mover advantage not only in frontline, but also now with China getting approval with the ADAURA to have an opportunity to further drive, where we are in China with that indication.
Pascal Soriot
Leon, anything you want to add, particularly for China?
Leon Wang
Yes. I think in China, we always stay ahead of this competition. And right now Hansoh's product is only second line. And now we are last year we already get into first line. So now the penetration is rapid into the first line patients. So patients who would rather take a better treatment compared with the first generation to catch. And also recent, much earlier approval of ADAURA and very good data for ADAURA. So, I think we are also getting now a share in ADAURA patients.
So, I think we will be always staying ahead of this competition. So, we'll help better to maintain big market share. And also with our commercial coverage, because AstraZeneca in China has the largest oncology sales team. So we are almost everywhere, in China, county, city, province. So we leave no patient behind with very strong operational access.
Tim Anderson
Thank you.
Pascal Soriot
Thank you, Leon. Simon Baker of Redburn. Simon, I'll go for you. And if I can help my colleagues and that applies to me as well, let's try to be short in our responses.
Simon Baker
Great. Thanks so much for taking my question. I'm sticking with oncology. Dave only in light of recent IQVIA data that shows there was a pickup at the end of March in oncologist visits and new diagnosis claimed. If you could give us a bit more color on what you're seeing yourselves more recently in terms of the rates of new diagnosis both in the U.S. and ex-U.S.?
And also sticking in the in the U.S. I wonder if you could give us your thoughts on the broader implications of this week's ODAC panel, which is looked at accelerated approvals. Thanks so much.
Pascal Soriot
Thanks, Simon. Dave, do you want to take this one?
Dave Fredrickson
Yes, please. So, Simon, if we take a look longitudinally over the course of the last year on diagnoses, what we saw was that, we set the pre-COVID baseline in March, across lung, ovarian, breast, CLL, which we're tracking the most closely. And in late Q2, early Q3 we saw the most significant depth dropping on by 30% plus 40%, relative to pre-COVID baselines.
We saw that grow back again, as we approached towards October. And in fact, from October, I think that we were optimistic that we were going to see ourselves in the U.S. come back to pre-COVID levels. November, December, January, we begin to see the impact of the third wave and as you point out, that's kind of taken us into seeing as returned back towards that 70% of pre-COVID baseline or minus 30% in lung, CLL, and ovarian.
It does seem that there's been an uptick in March, but a lot of these are lagging, so, I'm cautiously optimistic that it's moving back in the right direction. But I'd like to see another couple of months, obviously, vaccinations and kids returning to school, et cetera helps.
In terms of the second question on ODAC, I think the most important thing that we take away from this is that obviously, the ODAC panels are voting positively where there's clear unmet need. And I think that the positive votes that we saw in frontline bladder cancer were in cysts, or platinum eligible patients, where there's a general sentiment that there's a high level of unmet need in those niche populations. And I think that, it'll also be quite interesting to see what happens from the FDA as it relates to, they've now got to figure out for both of the positive ODACs what the confirmatory studies are going to be.
So, I still think that's yet to play out on those two elements. But I think that the main lesson, like I said, is where there's high unmet need, I think that there is greater desire on the part of the community to have more treatment options available, which I think makes sense.
Simon Baker
Great. Thanks so much.
Pascal Soriot
Thanks, Dave. So next question is Sachin Jain of Bank of America. Over to you, Sachin.
Sachin Jain
Hi. Thanks for taking my questions. Firstly on TROP2, Dave you flagged the TNBC data at ESMO next weekend, I think that's going to be the first data that allows a detailed comparison versus Fidelvi [ph] data on labels. So, are you comfortable with the data we will see will confirm a best-in-class profile versus a mid-30s, I think response rate on their label? Or is the data simply just too early at this stage?
And then, if I could just one quick one for Marc on gross margin. You've discussed the drivers, any color you can give on the magnitude of full year impact? Is the 1Q year-on-year roughly 300 basis point negative effect proxy for the full year? Thank you.
Pascal Soriot
Thanks, Sachin. Maybe Cristian could actually cover the top two question, and Marc, if you want then to jump on the gross margin question.
Cristian Massacesi
Thank you, Sachin for the question. Let me start flashing why we believe that we have a best-in-class TROP2 ADC? The payload TROP1 versus SN38 is 10 times more potent. We have a very high stable linker. The half-life of 1062 is five days. So, we can have a very convenient three weekly schedule.
We have clinical data that we share in non-small cell lung cancer, with the reference rate between 20%, 25% and the median PFS of eight-months that compare very well in the same setting with the competitors. Then the data, of course, I will not disclose the data that we will present at ASMO in a few days. But I think that will be another piece of evidence, is another presentation, our preliminary data triple negative breast cancer. But I think, this will be another piece of evidence.
We believe that this drug has high potential across the indication for the initial focus in non-small cell lung cancer, where we launched our first registrational study, and we are developing the combination with checkpoint inhibitors, and Keytruda and Nivolumab. And we have of course the focus in breast cancer, but of course, there will be a drug that can play a role across indications.
Marc Dunoyer
Okay. So, on the gross margin full year impact, I cannot give you the view on the percentage of gross margin for the end of the year. But I can certainly reiterate that the largest factor will be the pandemic vaccine dilution.
And then the other factors, which are negative is basically the profit share that is increasing over time. And that's strongly correlated with the progression of Lynparza.
The third factor is the China pricing, we have talked about it. This is both the impact of NRDL pricing as well as the value-based procurement. On the positive side, I mentioned earlier on the mix, if we have more oncology product with a beneficial impact. And obviously, there are also gains of productivity over the course of 2021, but they are not very large.
So these are other factors that contribute to the gross margin. But basically, what you see in the first quarter, as I said in my remarks is, these dynamics are going to continue over the course of 2021.
Sachin Jain
Thank you.
Pascal Soriot
Thank you, Marc. Next question, James Gordon. James, go ahead.
James Gordon
Hello, James Gordon, JPMorgan. Thanks for taking the question. A question on roxadustat, post the recently updated Phase III data. Can you give the latest thoughts in the products U.S. potential in dialysis, and where you now see the differentiation potentially versus ESA? Because I think you're now non-inferior on safety and the incidence and overall dialysis population. And you might even maybe look worse than severe stage in the prevalent dialysis population. So thoughts and walk through a commercial potential now ahead of the July outcome?
If I could squeeze in a clarification just on the gross margin point. Because your guidance, I believe, is excluding the vaccine. So, if we're going to try and model it, should we just assume that the gross margin is effectively nothing on the vaccine? So we put in whatever we want in the sales, we do no gross margin, and then we'll be able to understand what's going on an underlying basis for gross margin to the group?
Pascal Soriot
Marc, could cover the gross margin question. You have to remember, James, that there are low cost and cost of goods to the vaccine. There's also pharmacovigilance costs that we include in the cost we charge. But maybe we could with Ruud covering the roxadustat question in the U.S., the differentiation and the potential decision, as we see today.
Ruud Dobber
Yeah, absolutely. Thank you, James, for the question. So I think the product is still highly differentiated for a variety of reasons. Of course, the most easy one is that this is novel medication infers this infusion was equal.
The second clear differentiation is that roxadustat is working very well, influence patients. The data has clearly shown that. The third piece of differentiation is that if we're working with non-responders, roughly 15%-20% of the patients are not responding well to EPO and those patients need to get higher doses of EPO leading to higher cost of dialysis organizations.
And finally, there's also a less of a need for blood transfusions for roxadustat. So I think overall, we have a very compelling offering. I think that's also reflected in the very strong sales we have seen in China, $41 million in the quarter, and is driven by clearly dialysis dependent CKD, as well as non-dialysis.
So of course, we need to wait for the advisory committee meeting. But overall, I think, if we will get through it, we are confident for that that we still have a very differentiated product.
Pascal Soriot
Just take a quick, and again, just to reinforce what Ruud was saying, the big potential for this asset was always pre-dialysis. This suddenly remains. So we still believe there's a very substantial potential for this product. Marc, do you want to cover the margin?
Marc Dunoyer
Yes. Thank you, James. So, very briefly, obviously manufacturing cost, but both of those manufacturing costs, we have development cost, distribution cost and pharmacovigilance costs. But overall, these all discussed represent a small percentage of the revenue. And therefore, the gross margin itself is basically covering this limited cost in percentage.
James Gordon
Thank you.
Pascal Soriot
Thanks, Marc. Next is Richard Parkes. Richard, go ahead.
Richard Parkes
Hi, thanks for taking my questions. Firstly, a follow up on Tim's question, because it's been a lot of discussion in investors about competitive risk to Tagrisso. It looks like Hansoh's data has been and you've been selected as a poster. So maybe that tells us something.
But if you could help us understand your thoughts on the longer-term competitive threats Tagrisso in markets and outside of China? And whether being reimbursed through Medicare Part D represents a possible route to Hansoh Rx competing on price?
And secondly, very interesting data on the selective path. I just wondered if you could give us a sense of what the development program going forward could look like and whether you would consider head-to-head trials versus Lynparza in order to fully test that profile and whether your agreement with Merck allows you to do that? Thank you.
Pascal Soriot
Thanks, Richard. Dave, you want cover this?
Dave Fredrickson
Yes. So, Richard, maybe I'll focus in, as you highlighted, on the competitive pressure indeed that we see potentially outside of China. I mean, I think that Tagrisso's current position has been established based first on its clinical profile, second on the CDP and corresponding regulatory labels that we've obtained, and then thirdly, the commercial delivery. And I think all three of those elements are going to need to be in place in order for us to see competitors make a meaningful set of inroads.
I think that, again on clinical profile and you alluded the possibility of this in terms of the poster discussion, we'll have to wait and see. But I think that it's critical to remind our FLAURA approvals and the data set is based upon statistically significant PFS and overall survival. I think that while there are certainly potentially paths to market in the United States and in other areas, based upon only PFS, I think that that bar is going to be high. And I think that it's going to really depend upon also the generalizability of data set that is predominantly Chinese patients outside of China. So I don't think that the regulatory hurdles are insignificant there.
I would also then secondly, say on the clinical profile, we talk a lot about blood brain barrier and CNS. And so far from a preclinical standpoint, I think that we've got quite a bit of confidence in the Tagrisso profile, and don't have as much insight into some of the other medicines.
And then lastly, I do think that your point about Medicare Part D, I mean, Medicare Part D, yes is an important part of treating lung cancer, given the number of patients that are on Medicare. I think that it's important to note that as we get to ADAURA, the value to society, to patients and the healthcare system, even with an HTA assessment, is quite impressive.
So I think the value proposition for Tagrisso and the value being generated is turning into a positive story. And I think that that's something that becomes a core component of the conversations that we're going to be having with payers.
Pascal Soriot
Thank you, Dave. The next question is Mark Purcell with Morgan Stanley. Mark, go ahead.
Mark Purcell
Thank you, Pascal. So question on in HER2 low breast cancer. Please could you sort of help us understand the scientific and commercial opportunity here? I know, Susan, you've been talking about HER2 receptor standardization, and that's clearly important in terms of thinking about your confidence as you go down into IHC2 and then one plus patients as well. But obviously on Slide 33, there's some combinations that you sort of tantalizing in terms of AKT and TROP2 as well.
And then, Dave, on the commercial side, could you frame the patient population side of the debate? And there is seemingly lack of competition here, so if you could frame the commercial potential that would be fantastic. Thank you very much.
Pascal Soriot
So can I suggest that maybe - thanks Mark, sorry. Can I suggest Cristian cover the scientific view of this and then Dave you could cover the commercial potential?
Cristian Massacesi
Thank you, Pascal. Thank you, Mark, for the question. So Mark, as Dave presented that you have seen that HER2 low is 50%, 55% of all breast cancer. And this is actually the reason why we believe HER2 can be a transformational drug. This is affecting in which we are breaking the swing lanes from HER2+ ER+. Actually, we captured some triple negative patients, because in a subgroup of patients triple negative HER2 low is present.
We have a readout that now has been announced, in 2022, [indiscernible], in which we are comparing HER2 to standard-of-care that is chemotherapy, a single agent chemotherapy, different agents, [indiscernible] and so on. And I think we have confidence that an HER2 can play a major role in the setting, because we release data from the preliminary studies in which we observed a response rate that is 30% or higher, with a very impressive duration of response more than 10-months, and the PFS that is ranging between eight and 10-months.
When with any standard treatment you expect no more than 20% response rate a PFS around four months. So this is an incredible opportunity for breast cancer patients, and to fundamentally reshape our breast cancer is treated in independent of the subgroups.
Dave Fredrickson
Great. Thanks, Cristian. So then just turning to the - sorry, Pascal.
Pascal Soriot
No, go ahead.
Dave Fredrickson
So just turning to the commercial portion of this, Mark I think that the two things that are at this stage, I'd say worth highlighting, as we think through this, and it's probably something that's worth or even getting into greater depth at ASCO or some of the other sessions. But obviously, you've got one dimension, which is we'll see sort of if you will the degree of HER2 lowness, IHC2 plus 1 plus, and we'll see the data in terms of the benefits as we define this new patient segment.
I think that the second component that's important to remember is that, in redefining this, we're going to have a mix of patients that are hormone receptor positive, and patients that are triple negative, that fit within this population. And so actually, the competitive landscape is really different and the previous lines of therapy are really different.
So I think that as we model this, and as we think about the opportunity, part of what we're going to need to see is in fact, the data in these various patient populations, I think that for the triple negative patients who are going immediately to chemo, whether they're relapsed or de-novo. I think that this is going to be a very, very compelling data set.
If we've got an opportunity, obviously, to see that it's positive. In the hormone receptor population, I think that the question will be how early post AI and CDK4/6, does it make sense to begin to initiate. So these are some of the questions that we have to work on. Pascal, back to you.
Pascal Soriot
Thank you, Dave. So what I suggest we do we take a question online from Andrew Behrens at Leerink. And that's actually what helped me also go back to Richard's question, because I realized we forgot to address Richard's question about PARP.
So Andrew's question is you highlighted that your next generation PARP inhibitor. And I think it's coincident. And you indicated that this PARP has greater PARP trapping that's on the first-generation PARP inhibitors. I thought trapping has been found not to be clinically relevant. Do you think that this will be more important with selective PART? So that will be part 1 of the question, Susan, and part 2 will be Richard's question, which is - can you give us a sense of development program for the PARP1? And would you consider going head-to-head against in Lynparza in clinical trials? Go ahead, Susan.
Susan Galbraith
Richard, thank you. And thanks for the question. So first of all, I would just say that PARP trapping is important. What was sent to them in the context of the current clinically available PARP inhibitors, that when you adjust for the clinical dose and the relative potency of PARP trapping, you end up across the potent PARP trappers, which include veliparib as well as olaparib. You end up a reasonable level of efficacy, when adjusted for dose.
If you compare the PARP trappers with the veliparib, which doesn't check PARP effectively, then you see that the efficacy with the PARP trappers is indeed different and that remains important.
What we're trying to emphasize with the PARP1 selected molecule AZD5305 is that we have good PARP trapping capability, but the differential in both safety and efficacy is seen, because it's combined with a lack of activity on PARP2, which is responsible for some of the hematologic toxicity. So we got a greater therapeutic window, even then olaparib has with AZD5305. And that was described well at the AACR presentation.
And that leads on to the second question, which is okay, so how might you develop a selective PARP inhibitor. And one of the key things is, first of all, with an even safer profile than we have with an olaparib was open opportunity to go into early-stage settings, building off what we already know is efficacious with the current PARP inhibitors. And we know from those, the first lines of therapy, that you have greater effects when you go into earlier line. So that's one part of the program that we're interested in.
And secondly, that you can develop in combination with other cytotoxic-based therapies, which is something that the potent PARP have not been able to do without compromising on dose. And so that's what we see in preclinical and that's all the testing in the early clinical setting.
And indeed, one of the cytotoxic agents we'd like to be able to combine with includes [Indiscernible] inhibitors, which of course are part of the warheads of the ADC portfolio that we have. And we have preclinical efforts in that space as well. So I think it provides a potentially quite broad development program.
I would remind you that we started Phase I in the fourth quarter of last year. But we're still in the early development of PARP1 selective. It remains very exciting, and I look forward to sharing clinical data with you in the coming months.
Pascal Soriot
Thank you, Susan. Next question is from Emmanuel Papadakis of Deutsche Bank. Emmanuel, over to you?
Emmanuel Papadakis
Thanks for taking the question. I just like to extend my condolences to Oncology Head for that tragic news on Jose.
Perhaps I could take a couple of follow ups on HER2. You talked about the potential in the HER2 low breast setting commercially. We will of course have a second asset in a very similar setting like this year. So if you can just help us understand how you think those two might be positioned in the event, they're both pre-produced positive data in that setting hormone receptor positive setting?
And then on lung on HER2 lung. You had great overall now PFS data from DESTINY-Lung01, you had a breakthrough designation a long time going. Anything further in terms of registration timelines, could you just give us an update? Thank you.
Pascal Soriot
Thank you, Emmanuel. I think maybe Cristian, if you could take those questions?
Cristian Massacesi
Yeah, I have to say that the first one or the line was really disturbed. I'm not sure. Let me start Emmanuel with the lung. With the lung cancer, and HER2 ICG [ph] opportunity, within HER2, we have the opportunity fundamentally to create a new segment in lung cancer. This is a division and ultimately the reality today. You have seen the data. There are two specific segments, HER2 mutant. And you've seen the data we got the breakthrough designation, based on the DESTINY-Lung01.
And with 60% response rate, this is a setting where an actual player represents about 2% of the lung cancer overall. This is a very active area of development. And then recently in one-line conference we released the data in HER2+ in those small cell lung cancer, where we have an activity that is lower in terms of response rate and very good durability of the responses and medium PFS, in a setting that fundamentally is completely naive of any targeted therapy.
Here, we are developing combinatorial strategies in our DESTINY-Lung03, in combination with checkpoint inhibitors in combination with additional set of toxic to bring these regimens further. So we believe this is an important medicine that we love to shape even further, the treatments non-small cell lung cancer in these two segments as Dave mentioned.
And I would really ask you kindly to repeat the first part of your question, because the line was a little bit disturbed. Sorry.
Emmanuel Papadakis
Certainly. And also if you could just add when you expect to file with the FDA in HER2 mutant lung. And the first part of the question was just in terms of the positioning in HER2 and HER2 low breast relative to Tredelvi [ph], which of course has the [Indiscernible] HER2 study due to readout later this year. Thank you.
Cristian Massacesi
Sure. So the FDA interaction started, and so we will update accordingly based on the evolution of the conversation. I think the HER2 low segment and the potential role of a now that you see like a TROP2 ADC in breast cancer can have a different value proposition. We discussed about HER2 low, we discussed all of the data that HER2 producing to lung that was the standard-of-care.
And, I personally believe that HER2 low can become a targeted segment, while the current TROP2 development, TROP2 ADC development is focusing on North American population.
So we need to see the level of activity. But we believe that always that precision medicine, ultimately with that matter. And in HER2 low we have a target and we will have the possibility to position these medicines, probably even earlier line. I was mentioning before, DB04 without in 2020 is the first study where we are investigating HER2 as a standard of care. And the second line treatment now we started, we announced also a front-line study as a first chemotherapy for metastatic setting with that [Indiscernible] within HER2 standard-of-care Capecitabine taxane.
So, we believe that this offers a different value proposition compared to HER2. You know very well, we have TROP2 ADC development as well. And TROP2 ADC will have a place in breast cancer. I believe that HER2 low probably is not the best population.
Dave Fredrickson
I think that Emmanuel…
Pascal Soriot
I'm sorry, go ahead.
Dave Fredrickson
No, I was just going to say just a very quickly build on what Cristian said. I mean, I think that, remember, it's a broad HER2 - sorry, a broad hormone receptor positive population the Tredelvi study HER2 low specific within the DESTINY-Breast04. And so, I think that within that context, patient selection, I think is an important aspect of what would have gotten DB04. I think we could have longer durations of therapy that come out as a result of that.
And so, I do think that these are some important elements where there could be some good differentiation. And I tend to like the approach that we've taken, which is select the patients and do that based upon a strong biologic hypothesis. So I think that's the key thing that we'll look for.
Pascal Soriot
Next question is Andrew Baum of Citi. Andrew, go ahead.
Andrew Baum
Yeah. Couple of questions on the competitive dynamics, particularly [Indiscernible]. So first, one might imagine that EQR might pursue a price based advance supply strategy a little bit like Novartis did with inclisiran in the UK. So assuming that this is what pans out and the data is sufficient to win approval.
Firstly, how much risk do you think there is to your current to preserve franchises in European territories, as well as those areas that represent future potential demand that may not currently be contracting with you, given the entry of a deeply discounted, competitive new entrance?
And then second, perhaps you could update us on the timing of the interim analysis and confidence around your FLAURA II trial in combination with chemo. I asked, because I'm thinking obviously about the J&J combination with the Phase III on running. J&J seems like they borrowed a page from your [Indiscernible], kind of reaching that copy book to get familiarity with events not before they seek to get the full indication. Many thanks for that.
Pascal Soriot
Dave, do you want to take those?
Dave Fredrickson
Yeah. So on the first question, I think Andrew, the best thing that I've got to be able to draw as an analogy is I think that if we take a look at some of the first generation TKIs that are on the market or if we take a look at dacomitinib, I think that the strategies that have been pursued on those which have been I would describe as payer strategies, have not resulted in share change.
And I think that, again, it goes back to that the clinical profile and efficacy, safety, tolerability, - sorry, and CNS are going to be the core areas where the decision making is made. And so I think that within that context, we have to see where the profile is for the EQR drug. And I think that if it certainly is looking comparable, once again, I think that it's going to be a matter of the speed with which they are able to regulatory approval.
I think the same frankly applies in many respects within Europe. I think it's important to remember that within Europe, again, I think the movement with ADAURA is critically important, because that will be highly valued within even the HTA markets. I think that we're moving quickly to get approvals on the heels of Orbis. And I think that advantage allows us to be able to solidify a very good value story within Europe.
Lastly on FLAURA, readout timing for that is post-2022 on FLAURA 2. So I think that's the only thing I'd update there.
Andrew Baum
Thank you.
Pascal Soriot
Thank you, Dave. Next question is from Keyur Parekh from Goldman Sachs. Keyur, go ahead.
Keyur Parekh
Thank you, Pascal. A couple of questions, please. The first one on nirsevimab. If you can just help us understand your level of confidence on the MELODY kind of MELODY study coming up kind of given what you have data in house from the MELODY study? Are you kind of feeling more or less confident about the MELODY study coming up? That's one.
And then separately, as we see kind of earlier this week, BeiGene reported data for zanubrutinib on a head-to-head versus ibrutinib. Just would love your thoughts on the Alpine study data. Thank you.
Pascal Soriot
Thank you, Keyur. Dave, can I ask you to comment on maybe the second one, [multiple speakers] and then Mene could then cover the second nirsevimab question.
Dave Fredrickson
I think the main thing that I would just highlight and maybe in the spirit of being brief on this, I mean, I think that the zanu data do two things. The first is that it reinforces that selective inhibition may very well matter. And so that's something certainly that has been an important part of the narrative around calquence and that has resulted in the progress and good success that we've had in the U.S. And now we're having opportunities for in Europe.
I think the second thing that I would say is that the Alpine data are showing response rate data, response rate allows you to get to results fast. And there's certainly something that's beneficial about that. But those data have a medium follow up of about a year compared to the elevate RR which has a medium follow up closer to 40-months.
So, I do think that it's important to take a look at the maturity. I think that'll affect the approvability as well as the way in which it's received. So I think those are important things to understand when you take a look at Alpine and compare to 006.
Pascal Soriot
Thanks, Dave. Mene?
Mene Pangalos
I think that our confidence increased, because the current study readout was obviously highly positive and consistent what we're seeing in Phase II. So overall, we clearly have a very active antibody. So I would say we have confidence in MELODY as well.
Pascal Soriot
Next question is from Luisa Hector of Berenberg. Over to you, Luisa.
Luisa Hector
Thank you very much. My question is on Lynparza. And so from Dave's comments on diagnosis rates, it feels like Lynparza will be impacted by this. Could you confirm that and make a comment on how the uptake of testing is going?
And also just to prepare us for the outcome of prostate firstline PROpel study. Your expectations here, I think the Phase II data was pretty compelling. But how do you see the competitive landscape as others are working in this area? And I think you have twice a day dosing. Thank you.
Pascal Soriot
Thank you. So Dave, over to you.
Dave Fredrickson
Yeah. Maybe I'll take the first question and then Cristian, if you want to speak to the PROpel component on that might work. So, Luisa we do see that ovarian cancer has been affected by COVID-19 in terms of diagnoses. Interestingly, we haven't seen quite that same effect within breast cancer and not necessarily the same degree with prostate cancer.
So, I think that given the fact that we've got as robust of a label as we do with labels in ovarian, prostate, pancreatic and breast cancers, on top of that with the OlympiA data, which obviously we don't promote to, but we look forward to having presented. I do think that that mix allows us to continue to be able to have the growth rates that we've gone through.
But yes, I think that there's no question that ovarian cancer is experiencing some of the same diagnosis challenges that we've seen, and hopefully that alleviates in the second-half.
Cristian on PROpel?
Cristian Massacesi
Thank you, Dave. Thank you, Luisa. So the PROpel, Luisa can be actually the biggest indication of the potential or to become the thing the single largest indication for Lynparza.
After profound in that already is picking up and is establishing Lynparza as a treatment in metastatic prostate cancer. I think with PROpel, that is an approach in first line maintenance in combination with a chain abiraterone acetate gave Lynparza in selective patient population, the possibility to become a standard-of-care as in this larger segment.
PROpel is the first study that we readout. There are other trials ongoing. But I think we are - the preliminary Phase II data are very supportive on these potential readout that will happen anytime soon. And then this is a quarter, as you can imagine, we are waiting these results eagerly. The population is incredibly larger and we believe that the combination with abiraterone acetate is a drug that is extensively used in the settings, also being generic, will allow even establish even further Lynparza.
Pascal Soriot
Thank you, Cristian. Should we move to the next question Matt Weston with Crédit Suisse? Over to you, Matt.
Matt Weston
Thank you very much. My question is Leon on China. Leon, you still got a number of large revenue drivers in China from legacy after drugs. Can you map out where you see the key risks from future VBP? And if you can get your crystal ball out any idea on timing?
But also, I'd be very interested given your strong position in China, how you're managing VBP? Are there areas of growth that your findings that previously were unexpected? How easy is it to sustain incremental revenue in the face of competition?
Leon Wang
Very good question, Matt. I think we have - AstraZeneca in China is a very successful company. And we have quite some legacy, a brand of patents, branded products, which is getting to the VBP last year, this year and ultimately next year.
So, I think if you ask me to predict the VBP in China, I think the VBP batch 5 will be announced sometime May, June implemented in quarter three. And the next wave could be ensiling VBP and about similar VBP, and then we'll be batch 6 will be sometime late this year or early next year. So nobody can tell when, but it's really largely up to the government agenda. But I think it ultimately will come.
And how AstraZeneca manage VBP is, AstraZeneca brand in China is a very strong brand. Especially for chronic disease, we have a very strong reputation and a quality reputation among the patient consumers. And we also have very large local hospital sales team covering everywhere, and also retail pharmacy. And we recently established the online pharmacy team and department, and also, we launched our own internet hospital and online pharmacies in China.
So, basically in the future, if it's a strong brand, so doctor to patient education and repeat purchase and other hospital channel, online channel will be quite important for all the VBP brands. Of course, our future does not rely on the success of VBP brands anymore or legacy brands. So in China we are very successful with for Farxiga and Roxa and the new oncology portfolio Tagrisso, Imfinzi, Lynparza and even Zodexha [ph] have a relatively very low risk of VBP.
So, we have a large installation as well for Symbicort, Breztri, [Indiscernible] just launching into an NRDL and starting to show impact on volume. So I think we have also a long list of new future brands. I think this is really the focus, which are doing really well. So we have been very successful with the new product launch in the past several years.
Pascal Soriot
Thanks, Leon. Next one is coming from Naresh Chouhan.
Naresh Chouhan
Calquence please. It's been obviously informing very strongly. You've gone from one-third to 40%, first line new patient sharing in one quarter in the U.S., I think. And so the question really is, is there any reason to believe we would see a similar level of uptake outside of the U.S. And if not then how much upside or do you see upside to consensus numbers of around $3 billion in 2025?
And honestly, that's particularly relevant given the margin impact that Calquence would have given the Dutch patent box benefits? Thank you.
Pascal Soriot
Thanks, Naresh. Leon earlier asked [indiscernible] better again. Dave, you want to cover this question?
Dave Fredrickson
Yeah. And I guess fortunately, China doesn't have a lot of CLL patients, so that's a good thing for China on that particular dimension. But I think that in terms of the expectations within Europe, I think an important place to start is that yes, we absolutely have good expectations and ambition for Calquence within Europe.
It is important to note that in the United States, because we had the relapsed refractory mantle cell indication that we were able to drive on label use within that niche setting, which gave a number of the key centers an opportunity to get experience with Calquence, and to develop those patient experiences, particularly with the benefit risk profile.
And that empirical data that they generated has actually been quite beneficial in terms of not only driving us to parity share within that relapsed refractory mantle cell, but also within CLL. I highlight that because in Europe, we obviously don't have that same situation of the mantle cell label coming in before that.
So, there is more work that we're going to need to do, in order to be able to drive Calquence experience, and Calquence utilization and we got to move up that curve. With that said, I am pleased to say that we are already starting to see good progress within the UK, where we were able to capitalize on some opportunities that were created through COVID, to be able to introduce Calquence through an EAP there.
And in Germany, we've launched with pricing and reimbursement as of the 21 of December and in France, we've got an ATU. I do think the head-to-head data will be quite relevant within Europe, because those data I think will be helpful to European oncologists, hematologists and Hem/Oncs who may not have their own data sets within that. Thanks.
Pascal Soriot
Okay. Next question is Michael Leuchten of UBS. Michael?
Michael Leuchten
Thanks very much. One question for Marc, please. I'm assuming you knew at the beginning of the year that you were not going to have to pay tax on the Viela disposal. So, your full year guidance of $4.75 to $5 on EPS, there's obviously a healthy chunk in there from that benefit. So, when I tried to then triangulate that with your margin progression, I can sort of see how you get a little bit of margin improvement on that basis.
But it isn't really all that much. So, as we think about the rest of the year, what's going to hold your margin back that we should be aware of? And again, I appreciate this is without the vaccine. And then a quick question for Leon on the SGLT2 in China and that sort of weird scenario now where Farxiga is on the NRDL and is doing well. But you do have some other SGLT2 subject to VBP. Does that matter? And if so, how?
Pascal Soriot
Thank you, Michael. Can I suggest that maybe we start with Leon with China question? Leon, you want to cover it and then Marc can cover the first question.
Leon Wang
For SGLT2, we realized that there are other SGLT2 already going generic in China, already getting the VBP. But they are relatively small volumes. So, VBP is a volume-based procurement. So, relatively small volume. We are 90% plus in SGLT2 class, so I think we will still be good for the next three, four years until we patent expire in China.
So, I think beyond the patent expire, I think Farxiga will gradually become a consumer brand, more repeat purchase by the long-term users, because its long-term benefits were established among patients and doctors as well. So, I don't worry too much about the other SGLT2 going VBP. I don't think there's any major impact in that perspective.
Pascal Soriot
Thank you, Leon. Marc, the second question.
Marc Dunoyer
So rapidly on the Viela tax rate. So yes, we knew that the capital gain tax would not be levied. What we did not know earlier in the year was, at what price the transaction could be concluded. So therefore, we didn't know the quantum, we knew that it would be tax free.
We also take into account events that we are anticipating from different jurisdiction on increase in several jurisdictions of the corporate tax rate to be announced and decided over the course of 2021. And we reconfirm that we expect the tax rate or corporate tax rate to be between 18% and 22%.
Pascal Soriot
Thank you, Marc. The next question is from Sam Fazeli of Bloomberg. Sam, over to you.
Sam Fazeli
Thank you very much, Pascal, for taking my questions. Just quickly, on the Lynparza, OlympiA. Do you expect the data to be strong enough for regulatory approval and use or take up in the market without NOS data point yet?
And then on the DDR programs obviously, you had some V1 data. And I just would love to hear your view of the competitive landscape and how this drug fits in? And the ATR inhibitor has been in Phase II for quite a while. What is the issue with moving forward if there is any issues? Thank you.
Pascal Soriot
Thank you, Sam. Susan, do you want to cover those?
Susan Galbraith
Yeah, I'm happy to. Thanks for the question. So in terms of the OlympiA data, obviously we've released with a press release that we've met the primary endpoint. And we do anticipate that this endpoint, which is accepted in the adjuvant setting, in breast cancer, can potentially lead to regulatory approval in this setting.
In terms of V1, obviously, you've seen the data from the AACR that there is an [Indiscernible] V1 inhibitor that is now entering and there were others that have started to come in. We have already shared at ESCO last year, the data that was done in collaboration with Joyce Lau from the NCI, looking in-vitro and serous carcinoma. And we have initiated a study in that setting. There are other potential opportunities that we want. And we look forward to sharing those in the coming months.
I think there will be more data coming out from that. Obviously, we want - inhibition is also associated with GI-toxicity. And that's led to some of the challenges in terms of combinations.
In terms of the AACR inhibitor, again, there are several different places where we're looking at the combination of AACR with other drugs in the portfolio, not just with olaparib, but also with Imfinzi. And we have shared some data that came out the HUDSON study in patients with non-small cell lung cancer, who have progressive sites for our checkpoint inhibition with a PD-1 or PD-L1 agent.
And we will be updating those data later in the year. But there's also a drawing attention to an abstract at ASCO, which has a poster discussion in post-IO melanoma as well. And so I think there's interesting data emerging from a couple of settings for the AACR inhibitor.
Cristian Massacesi
Yeah, it's great and just to let you know ASCO released the primary list. OlympiA is in preliminary at ASCO. So this takes on the data that will be presenting and potentially regulatory submission and discussion that can happen based on this data.
Pascal Soriot
Thank you, Cristian. Very important point there. And so you have lots of questions. So we'll take two more. And then we'll have to close. So Seamus Fernandez of Guggenheim. Seamus, over to you.
Seamus Fernandez
Great. Thanks so much for the question. So, Pascal for you, one of the questions that we're starting to get is with the incremental cash flow, that the company is going to be able to capitalize on with the Alexion acquisition. Should we anticipate AstraZeneca being more active in the BD landscape? Obviously, the need to distribute equity related to Daiichi Sankyo was a question, but it seems like AstraZeneca has a very good track record for early deals. And just wondering, how we should be thinking about deal activity in the wake of a successful close of the Alexion transaction, perhaps in 2022 and going forward?
And then the second question is for Susan. Susan, can you just give us your thoughts on CDK9, MCL and the Bcl-2/xL in the context of the ability to combine with Calquence or other products? Of the three, which are you most excited about? Thanks.
Pascal Soriot
Thank you, Seamus. So the first question, the Alexion acquisition that we have just from a [Indiscernible], you should remember that the main driver of the acquisition is the science that exists at Alexion, especially in the [Indiscernible] which complements our focus in immunology. But also the entry into the important segment rare diseases.
Incidentally, our friend Alexion released their results today and they have very good first quarter, with 13% increase in sales. So they continue to do well. As far as the cash flow, it's of course, also very important consequence of this potential acquisition.
How to answer your question, it's sort of a difficult. We've said that of course, we are considering increasing the dividend and that's a decision that we have to make. And we will also deliver a major step. But if it's full, it also enables us to consider additional business development.
We're constantly looking at the deal like we have done in the past. But you also need to keep in mind when you were licensing products or buy products, you don't have to develop them. We have a very rich portfolio and we really try to focus our resources on making products that can help to or many others [Indiscernible] really big blockbusters.
So we will always consider it even in the context of maximizing the assets we have in our existing portfolio.
So Susan, the second question is for you.
Susan Galbraith
Yeah. Thank you, Seamus, for the question. So I think this is all just to sort of categorize them. And both MCL and CDK9 are essentially trying two different ways to target a really important target at Alexion. MCL1 inhibitor is a direct inhibitor given intravenously.
And actually the data, if you look at the preclinical data for this target, it was particularly interesting in combination with the Bcl-2 inhibitor which is another mechanism in the [Indiscernible] family. So when you adjust both together, you have particularly strong activity preclinically.
The chance is always is that combination, and to have a good safety profile. So we are testing that combination in early phase clinical trials. It's too early to say at the moment whether the safety profile is going to have the efficacy that we want you to see.
CDK9 is a different way of targeting MCR1/2 inhibition on a [Indiscernible], which basically stops transcription, because MCL1 [Indiscernible] in particular, they also have a broader effect. And again, that means the safety profile is going to be key. We clearly see activity in some hematologic malignancy. We always talked about the potential for that. But again, we have to understand that balance of safety and efficacy.
The Bcl-xL is not just the Bcl-xL inhibitor, Bcl-xL and Bcl-2 which is [Indiscernible]. And it's been formulated as a number of goal to provide an optimized TKPD profile. So I think, again, this is an early phase dose escalation and study, that we talked about that.
I think it's hard to pick between them, because it's ultimately going to be that benefit risk profile that we haven't pushed them to the limit of the dose escalation yet to really understand that. So you have to be patient for another three months before we can answer that question.
Pascal Soriot
Thank you, Susan. So we will take one last question. Steve Scala, Cowen. Steve, one question, please.
Steve Scala
Okay. Yes, I have one question on HER2 with a couple parts. I'm curious if there are interim looks at DESTINY-Breast04? And if so, have any occurred yet? What does the fact that the delay just was announced? Tell us about the cadence of the accumulation of events? Is it accrual event, event accrual slowing? And what does that tell us? And why was DESTINY03 so far been spared of delays? Thank you.
Pascal Soriot
Thank you, Steve. So maybe Cristian, you could take those questions?
Cristian Massacesi
Yes. Thank you, Pascal. Thank you, Steve. I mean, Steve, in general, when events are coming, lower base is most of the time good thing. We don't know. It's a blind study. We are waiting the right number of events to run the analysis as a predefined by the protocol. As Daiichi Sankyo announced and we are confirming here today, this is moving few months later than affected. That is really simply driven by a number of events that we are accruing.
DESTINY-Breast03 actually is still on track for the analysis that was planned. Here, we are accruing the event as planned. So, I cannot tell you more than this. I mean, what I can tell is that the assumption where both studies are based on, I talked before about getting better for HER2 low, for DESTINY-Breast03. The level of activity we have seen within HER2 in later line is superior than the expected level of activity of the PD-1 in this specific setting, either in terms of response rate and the specific or in terms of PFS. So we are feeling incredibly confident that 03 will have a positive result.
Steve Scala
Thank you.
Pascal Soriot
Thank you, Cristian. So we will close here. We thank you very much for your interest in our company and your great questions. Just a couple of points in closing, we had a very good first quarter with 7% increase, excluding the vaccine this year, despite a very tough comparison to Q1 last year, and also a headwind from COVID like all our peers or most of our peers are experiencing for the first-half. We think we will continue to experience those headwinds. And we believe that the second-half of the year should see an acceleration of growth.
But definitely 7% is a very robust results.
And as a reminder, if we correct for the inventory build of last year our loss rate would have been low double digits. So really strong. Oncology plus 16%, New CVRM 15%. Respiratory & immunology would have gone but is impacted by COVID and the effect it has on the clinicians in particular, and the emerging markets continue to do quite well. Our profit is up 34% and we are doing quite well. So we are on track. We reconfirm the guidance for the year.
With this, we thank you again for your interest. And wish you a good day. Good-bye.
