AstraZeneca ups earnings target as cancer partnership Lynparza delivers
AstraZeneca upped its full year core earning guidance after a third quarter where revenues and profits beat City forecasts after fast-growing external partnership revenues offset lower direct drug sales.
AstraZeneca
11,654.00p
17:15 27/09/24
FTSE 100
8,320.76
16:59 27/09/24
FTSE 350
4,599.36
17:10 27/09/24
FTSE All-Share
4,555.44
17:04 27/09/24
Pharmaceuticals & Biotechnology
22,314.18
17:10 27/09/24
The FTSE 100 drug giant said it now anticipates 2017 core earnings per share "towards the favourable end" of its guidance range, though that still means EPS will decline by a low rather than mid-teens percentage.
Total revenue for the quarter of $6.23bn was up 9% on the same period last year ahead of consensus by 4%, while nine-month turnover of $16.60bn down 4%.
Product sales of $4.88bn in the quarter were down 3% or 9% for the year to date due to entry of generic competitors to its Crestor and Seroquel drugs.
But total revenue was supported by new externalisation revenue, where AstraZeneca has an interest in a partner company's drug, which amounted to $1.35bn in the quarter, much better than analysts had expected as $997m was received from the Lynparza collaboration with Merck (MSD).
Thanks to research and development costs falling 3% and overheads by 11%, or 1% and 9% at constant exchange rates, reported operating profits rose 12% to $1.15bn and core operating profit core EPS rose 9% to $1.85bn.
Core EPS fell 15% in the quarter to $1.12 due to comparison with a strong quarter last year when there was a one-off tax benefit, while EPS was down 32% at the reported level to $0.54, down 3% to $1.34 over nine months.
Chief executive Pascal Soriot said sales reflecting good commercial execution, including strong growth in emerging markets with a standout performance in China, where sales in the quarter increased 14% at constant exchange rates.
"It was, however, the raft of news flow and approvals that was most notable," he said. "In particular, the positive developments for Tagrisso and Imfinzi in lung cancer and benralizumab and tezepelumab in asthma offset the disappointment of the first readout from the MYSTIC trial."
In late July shares in the company fell around 15% after initial results from the Mystic lung cancer drug trial failed to meet primary endpoints.
Elsewhere in oncology, said this month's news on accelerated approval for Calquence in the treatment of an aggressive form of blood cancer "was an important milestone for a medicine that will be the cornerstone of our presence in blood cancers".
He also said there was "significant opportunities" offered by the new strategic collaboration with Merck to maximise the potential of Lynparza.
The company is planning to a regulatory submission of Tagrisso as a first-line lung cancer therapy in coming weeks and still anticipating final data readouts for Mystic in the first half of next year and in the same period data on Lynparza's effects as a first-line treatment on ovarian cancer, while also “actively preparing” for potential launch of Imfinzi in stage-three lung cancer in the first half of 2018 following positive results in the Phase 3 'Pacific' trial.
Astra shares were up almost 2% to 5,092p after an hour of trading in London on Thursday.
Broker Shore Capital said nine-month revenues were 9% ahead of consensus forecasts result of the annualisation of the impact of Crestor generics. and called the trading update "solid".
Analyst Tara Raveendran noted that growth platforms have become increasingly important, with sales up 6% at CER and now representing 66% of group revenue, but the respiratory business was strained as expected, down 2% as a result of increasing competition, particularly in the US where there was a 15% decline amid “expectations of continued challenging conditions”.
She note a number of pipeline updates, including Phase III ARCTIC readout shifted to H1 2018 from H2 2017, Phase III Danube now seen in 2019 from second half 2018, with the endpoint as overall survival and that a new Phase III trial has been added – Hmalaya for first-line liver cancer looking at Imfinzi mono, Imfinzi+treme vs sorafenib (Nexavar).