AstraZeneca Q1: "Something Tangible to Believe In"

3 pink flags with AstraZeneca logos

Roland Magnusson /

AstraZeneca reported first-quarter financials, with Product Sales growing 10% (14% at CER) to $5.465 billion. What is more startling, and completely in accordance with the company’s stated goals, Global Oncology sales increased by 54%.

“Our 14% Product Sales growth in the quarter reflected the success of our new medicines and Emerging Markets,” stated Pascal Soriot, company chief executive officer. “In Oncology, Tagrisso, Imfinzi and Lynparza continued to do well and, in BioPharma, Farxiga, Brilinta and Fasenra also grew strongly. Emerging Markets, our largest sales region, delivered an outstanding performance with a 22% growth rate; all of its sub-regions grew strongly, including China at 28%.”

Soriot has been in the process of restructuring the company’s research-and-development division to focus more on oncology, and it appears to be working.

Ed Corbett, a partner at London-based Novasecta, told Bloomberg that AstraZeneca has one of the most mature pipelines in the industry, with 17% of its compounds in late-stage development. “They’ve got a whole raft of approvals in the pipeline,” he said. “Their transition from big pharma to big biotech is happening.”

It's not completely clear what Corbett means by that, although perhaps it suggests the company is now more focused on developing new drugs as opposed to selling older drugs.

Ruud Dobber, AstraZeneca’s executive vice president, BioPharma, told Reuters, “The enormous growth you currently see in China, 28%, probably is not sustainable, but we feel very bullish that the growth will continue to be at a pace of between 15% and 20%.”

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On March 28, AstraZeneca announced a global development and commercialization pact with Daiichi Sankyo Company for trastuzumab deruxtecan (DS-8201), an antibody-drug conjugate (ADC) and possible new targeted drug for cancer. AstraZeneca, in the announcement, noted that it aligned with the company’s strategy in oncology, which is based on four key scientific platforms: tumor drivers and resistance, DNA damage response, immuno-oncology, and ADCs.

ADCs are antibodies that are designed to specifically attach to cancer cells. The antibodies are attached to a chemotherapy drug with a molecular linker. The result is the ADCs are able to precisely deliver cancer drugs to cancer cells.

Trastuzumab deruxtecan is in development for multiple HER2-expressing cancers, including breast and gastric cancer, and in patients with HER2-low expression. The drug was granted Breakthrough Therapy Designation by the U.S. Food and Drug Administration (FDA) in 2017 for HER2-positive, locally-advanced or metastatic breast cancer in patients who have been treated with trastuzumab and pertuzumab and have disease progression after trastuzumab emtansine.

AstraZeneca paid Daiichi Sankyo $1.35 billion upfront, half due upon execution, the rest payable in a year. Various milestone payments could hit $5.55 billion.

This deal is touted by investors as proof of just how deeply Soriot and AstraZeneca have invested in their oncology focus.

The company recently updated its guidance for 2019. It projects a single-digit percentage increase in product sales and Core earnings per share (EPS) of $3.50 to $3.70. It also indicated that it has made extensive preparations for the UK’s exit from the European Union, or Brexit, even if there’s a no-deal exit. It’s spent more than $52 million on Brexit preparations, including stockpiling six weeks’ worth of drugs in the UK and four weeks in continental Europe.

Of the quarterly report, Nicholas Hyett, an analyst with Hargreaves Lansdown, stated, “We’re reaching that point where after years of having to keep faith, we have actually got something tangible to believe in.”

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