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Regulatory Story
Company AstraZeneca PLC
TIDM AZN
Headline AstraZeneca year-to-date and Q3 2019 results
Released 07:00 24-Oct-2019
Number 9384Q07

RNS Number : 9384Q
AstraZeneca PLC
24 October 2019
 

AstraZeneca PLC

24 October 2019 07:00 BST

 

Year-to-date and Q3 2019 results

 

Patients to benefit from further pipeline progress; sales-growth momentum driving operating leverage

 

Year-to-date Product Sales growth of 13% (17% at CER1) to $17,315m included third-quarter Product Sales of $6,132m (+16%, +18% at CER). The third quarter again saw all three therapy areas and every sales region produce encouraging performances, including:

 

-    The continued performance of new medicines2, with sales growth in the quarter of 62% (+64% at CER) to $2,707m, including new-medicine growth in Emerging Markets of 85% (90% at CER) to $539m

 

-    Sales growth by therapy area in the quarter: Oncology +46% (+48% at CER) to $2,334m, New CVRM3 +8% (+11% at CER) to $1,113m and Respiratory +15% (+18% at CER) to $1,319m

 

-    Sales growth by region in the quarter: total Emerging Markets sales grew by 25% (29% at CER) to $2,123m, with China sales growth of 35% (40% at CER) to $1,283m, ahead of longer-term trends. US sales increased by 17% to $2,025m; Europe sales continued their return to growth, increasing by 1% (4% at CER) to $1,139m; Japan sales increased by 31% (27% at CER) to $657m

 

The Company today upgrades its Product Sales guidance at CER for the year.

 


YTD 2019

Q3 2019


$m

% change

$m

% change


Actual

CER

Actual

CER

Product Sales

17,315

13

17

6,132

16

18

Collaboration Revenue

405

3

6

274

n/m

n/m

Total Revenue

17,720

13

17

6,406

20

22








Reported4 Operating Profit

2,347

2

3

757

(11)

(13)

Core5 Operating Profit

4,891

41

42

1,880

43

41








Reported EPS6

$0.79

(11)

(15)

$0.23

(33)

(38)

Core EPS

$2.61

39

38

$0.99

40

36

 

Pascal Soriot, Chief Executive Officer, commenting on the results said:

"With AstraZeneca growing at pace, our sales guidance has been upgraded for the second consecutive quarter. Another strong performance from our new medicines accompanied impressive results in our key markets, most notably in China, the US and Japan. The performance reinforces our confidence in delivering sustainable earnings growth.

 

We delivered further positive news for patients. Lynparza demonstrated its potential as a treatment for prostate cancer and as an expanded treatment for ovarian cancer. Tagrisso, Imfinzi and PT010 also had positive data, and we delivered breakthrough data in heart failure for Farxiga.

 

We are continuing to ensure that we capture the benefits of our growth by balancing reinvesting in our business, delivering on our sustainability commitments, continuing to improve our operating leverage and cash generation."

 

Financial summary

 

-    Product Sales increased by 13% in the year to date (17% at CER) to $17,315m. The performance in the quarter was supported by favourable inventory and gross-to-net movements which are not expected in the final quarter of the year

 

-    The Reported Gross Profit Margin increased by one percentage point in the year to date to 80%, partly reflecting the mix of sales; the Core Gross Profit Margin increased by one percentage point in the year to date to 81%

 

-    Reported Operating Expense increased by 11% in the year to date (15% at CER) to $12,871m and represented 73% of Total Revenue (YTD 2018: 74%). Core Operating Expense increased by 3% (6% at CER) to $10,537m and represented 59% of Total Revenue (YTD 2018: 65%), demonstrating a significant improvement in operating leverage

 

-    Reported R&D Expense increased by 1% in the year to date (5% at CER) to $3,968m. Core R&D Expense increased by 1% (4% at CER) to $3,826m, partly a result of investment in the development of the potential new oncology medicine, trastuzumab deruxtecan

 

-    Reported SG&A Expense increased by 16% (20% at CER) in the year to date to $8,656m, due to an increase in legal provisions and revaluation movements on acquisition-related liabilities in the year to date; Core SG&A Expense increased by 4% (8% at CER) to $6,464m, primarily reflecting growth in China, as well as ongoing additional support for new medicines. An update on legal matters and subsequent events is disclosed in Note 5 and Note 6

 

-    Reported Other Operating Income and Expense declined by 32% in the year to date (31% at CER) to $1,041m; Core Other Operating Income and Expense declined by 7% (6% at CER) to $1,060m

 

-    The Reported Operating Profit Margin declined in the year to date by one percentage point (two at CER) to 13%; the Core Operating Profit Margin increased by five percentage points to 28%

 

-    The Reported Tax Rate in the year to date was 27% (YTD 2018: 18%); the Core Tax Rate was 22% (YTD 2018: 19%). The tax rates in the year to date reflected the geographical mix of profits and the impact of collaboration and divestment activity

 

-    Reported EPS of $0.79 in the year to date, based on a weighted-average number of shares of 1,297m, represented a decline of 11% (15% at CER); Core EPS increased by 39% (38% at CER) to $2.61. In April 2019, the Company completed an issue of 44,386,214 new ordinary shares of $0.25 each at a price of £60.50 per share, resulting in an increase in share capital of $11m and an increase in share premium of $3,479m, net of transaction costs of $22m

 

-    The difference between the Reported and Core EPS year-on-year performance partly reflected the impact of a favourable $346m legal settlement in YTD 2018 that was recognised as income in Reported Other Operating Income and Expense. It was also a result of the aforementioned increase in legal provisions and revaluation movements on acquisition-related liabilities in 2019

 

-    The Company today upgrades its Product Sales guidance at CER for the year. Product Sales are now expected to increase by a low to mid-teens percentage; the prior guidance was for a low double-digit percentage increase

 

Commercial summary

 

Oncology

Sales growth of 50% in the year to date (54% at CER) to $6,393m, including:

 

-    Tagrisso sales of $2,305m, representing growth of 82% in the year to date (86% at CER). The performance included growth in Emerging Markets of 108% (120% at CER) to $553m that partly reflected the early-2019 inclusion of Tagrisso as a 2nd-line treatment for EGFR7-mutated (EGFRm) NSCLC8 on the China National Reimbursement List (NRDL). Tagrisso is now approved as a 1st-line treatment in most major markets

 

-    Imfinzi sales of $1,045m, representing growth of 182% (184% at CER). Commercial execution and favourable reimbursement decisions supported sales growth outside of the US. Europe sales increased significantly to $115m (YTD 2018: $9m), accompanying encouraging Japan sales of $149m (YTD 2018: $9m)

 

-    Lynparza sales of $847m, representing growth of 93% (98% at CER). The performance included growth in the US of 86% to $432m and Emerging Markets of 205% (227% at CER) to $101m as the medicine consolidated its leadership position in the poly ADP ribose polymerase (PARP)-inhibitor class    

 

-    The performance from more-mature Oncology medicines in the year to date included a decline in Faslodex sales of 4% (1% at CER) to $726m and a 16% decline in Iressa sales (11% at CER) to $343m. The Company anticipates continued declines for both medicines, partly reflecting generic Faslodex competition in the US and the pricing impact on Iressa from centralised procurement in China and the success of Tagrisso; both medicines saw significant declines in the third quarter

 

-    Oncology sales growth in Emerging Markets of 42% (51% at CER) to $1,665m

 

New CVRM

Sales growth of 11% in the year to date (14% at CER) to $3,207m, including:

 

-    Brilinta sales of $1,153m, representing growth of 22% (26% at CER). The performance was bolstered by results in Emerging Markets, where sales grew by 50% in the year to date (59% at CER) to $348m. Patient uptake continued in the treatment of acute coronary syndrome and high-risk post-myocardial infarction

 

-    Farxiga sales of $1,124m, with growth of 13% (17% at CER), ahead of the impact of label updates to reflect results from the DECLARE CV outcomes trial (CVOT). The level of sales growth in the US was adversely impacted by gross-to-net adjustments; underlying demand remained strong

 

-    Bydureon sales of $410m, a decline of 8% (7% at CER), partly driven by the impact of production constraints in the first half for the new Bydureon BCise device and declining volumes for the dual-chamber pen

 

-    New CVRM sales growth in Emerging Markets of 37% (46% at CER) to $835m

 

Respiratory

Sales growth of 9% in the year to date (13% at CER) to $3,854m, including:

 

-    A Symbicort sales decline of 7% (4% at CER) to $1,783m, reflecting continued pricing pressure and the impact of managed-market rebates in the US. This was partially offset by Emerging Markets growth of 10% (18% at CER) to $401m

 

-    Pulmicort sales growth of 17% (23% at CER) to $1,053m; the majority of Pulmicort sales were in Emerging Markets. Q3 2019 global sales increased by 28% (31% at CER) to $337m

 

-    Fasenra sales of $498m, representing growth of 189% (193% at CER). Fasenra leads the medicine class for the treatment of severe eosinophilic asthma by new patient share in a number of key markets

 

-    Respiratory sales growth in Emerging Markets of 24% (31% at CER) to $1,419m

 

Emerging Markets

As the Company's largest region, at 35% of total Product Sales, Emerging Markets sales increased by 19% in the year to date (26% at CER) to $6,074m, including:

 

-    A China sales increase of 30% (37% at CER) to $3,691m. Highlights included: 

-     Oncology sales growth of 58% (67% at CER) to $1,023m

-     New CVRM growth of 78% (88% at CER) to $359m

 

-    An ex-China sales increase of 5% (12% at CER) to $2,382m (Q3 2019: $839m, +12%, +15% at CER). All regions were in CER sales growth in the year to date, including: (ex-China) Asia-Pacific, Middle East and Africa, Brazil and Russia

 

Sustainability summary

In the year to date, AstraZeneca was recognised as a global sustainability leader:

 

-    The Company achieved fourth position overall in the pharmaceutical industry in the 2019 Dow Jones Sustainability Indices (DJSI). AstraZeneca maintained its 2018 overall score and achieved a perfect score of 100 in the areas of environmental reporting, labour-practice indicators, social reporting and health-outcome contribution. This marked the 18th time that AstraZeneca was included in the indices

 

-    The Company was again named as a member of the FTSE4Good Index Series, ranking in the 94th percentile of the healthcare industry, with perfect scores in climate change, anti-corruption, corporate governance and customer responsibility

 

Recent developments and progress against the Company's sustainability priorities are reported below:

 

-    Access to healthcare: the Company celebrated the fifth anniversary of its Healthy Heart Africa (HHA) programme, conducting over 12 million blood-pressure screenings and identifying over two million elevated readings since its launch in 2014, working with collaborators across Kenya, Ethiopia, Tanzania and Ghana

 

-    Environmental protection: AstraZeneca participated in Climate Week, taking part in events such as The Climate Group's 'Step Up: The Business Case for Greater Government Ambition' panel, as the first pharmaceutical-company member of the global EV100 initiative

 

-    Ethics and transparency: the Company launched an employee campaign, 'Speak Up - Your Voice Matters' using internal social-media channels. The campaign encouraged honest and open dialogue in support of a healthy business culture, where people feel able to make their voices heard

 

A more extensive Sustainability update is provided later in this announcement.

 

Pipeline highlights

The following table highlights significant developments in the late-stage pipeline since the prior results announcement:

 

Regulatory approvals

-     Tagrisso - NSCLC (1st line, EGFRm): regulatory approval (CN)

-     Farxiga/Forxiga - T2D10 CVOT: regulatory approval (US, EU)

-     roxadustat - anaemia of CKD11, NDD12: regulatory approval (CN)

-     Fasenra Pen - severe eosinophilic asthma; auto-injector and self-administration: regulatory approval (US)

Regulatory submissions and/or acceptances

-     Lynparza - pancreatic cancer (1st line, BRCAm): regulatory submission acceptance (US, EU)

-     Calquence - CLL13: regulatory submission under review (US)

-     trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER214-positive): regulatory submission acceptance (US, JP); Priority Review designation (US)

-     Brilinta/Brilique - CAD15/T2D CVOT: regulatory submission acceptance (US, EU)

Major

Phase III data readouts or other significant developments

-     Tagrisso - NSCLC (1st line, EGFRm): met Phase III key secondary endpoint (OS16)

-     Imfinzi + treme - NSCLC (1st line) (NEPTUNE): did not meet Phase III primary endpoint

-     Lynparza - ovarian cancer (1st line) (PAOLA-1): met Phase III primary endpoint

-     Lynparza - prostate cancer (2nd line, castration-resistant): met Phase III primary endpoint

-     Calquence - CLL: Breakthrough Therapy Designation (US)

-     Farxiga - HF17 CVOT: met Phase III primary endpoint; Fast Track designation (US)

-     Farxiga - CKD: Fast Track designation (US)

-     Qtrilmet - T2D: positive opinion (EU)

-     PT010 - COPD18 (ETHOS): met Phase III primary endpoint

-     PT010 - COPD: complete response letter (US)

-     Fasenra - eosinophilic oesophagitis: Orphan Drug Designation (US)

-     anifrolumab - lupus (SLE19) (TULIP 2): met Phase III primary endpoint

 

Guidance and financial priorities

All measures in this section are at CER and Company guidance is on Product Sales and Core EPS only.

 

All guidance and indications provided assume that the UK's anticipated exit from the EU, even in the event of a no-deal exit, proceeds in an orderly manner such that the impact is within the range expected, following the Company's extensive preparations for such an eventuality.

 

AstraZeneca anticipates strong and sustainable long-term Product Sales growth to be accompanied by operating leverage, leading to an improvement in profitability and cash generation.

 

Guidance: Product Sales

Reflecting the performance over the year to date, guidance for Product Sales in FY 2019 has been upgraded. Product Sales are now expected to increase by a low to mid-teens percentage; the prior guidance was for a low double-digit percentage increase.

 

Guidance: Core EPS

As a key part of its long-term growth strategy, the Company is committed to focusing on appropriate cash-generating and value-accretive collaboration activities that reflect the ongoing productivity of the pipeline. Separately, AstraZeneca will, from time to time, also focus its medicine portfolio through divestments.

 

AstraZeneca reiterates its Core EPS guidance of $3.50 to $3.70 over the full year. This guidance includes the anticipation of a significantly lower sum of Collaboration Revenue and Core Other Operating Income and Expense versus the prior year. It also reflects the opportunities being taken to reinvest in the business, particularly in China and in the Company's new medicines, in order to strengthen AstraZeneca's long-term growth profile.

 

Variations in performance between quarters can be expected to continue. The Company is unable to provide guidance and indications on a Reported basis because the Company cannot reliably forecast material elements of the Reported result, including the fair-value adjustments arising on acquisition-related liabilities, intangible-asset impairment charges and legal-settlement provisions. Please refer to the section Cautionary Statements Regarding Forward-Looking Statements at the end of this announcement.

 

Operating leverage

The Company expects to deliver significant operating leverage over the long term; encouraging progress was made in the year to date. The Reported Operating Profit Margin declined in the year to date by one percentage point (two at CER) to 13%; the Core Operating Profit Margin, however, increased by five percentage points to 28%. Core Operating Profit in FY 2019 is anticipated to increase ahead of Product Sales.

 

Cash generation

In FY 2019, the cash performance is expected to include a number of payments relating to prior business-development transactions; the majority of the value of these payments in the year was settled in the first half. AstraZeneca generated a Net Cash Inflow from Operating Activities of $1,594m in the year to date, compared to an inflow of $394m in YTD 2018.

 

Other indications

The Company also provides other indications for FY 2019:

 

-    Capital expenditure is expected to be broadly stable and restructuring expenses are targeted to reduce versus the prior year

 

-    The Core Tax Rate range has been narrowed to 20-22% for FY 2019 from the previously anticipated range of 18-22% (FY 2018: 11%). Variations in the Core Tax Rate between quarters can be expected to continue

 

Currency impact

If foreign-exchange rates were to remain at the average of rates seen in the nine months to 30 September 2019, it is anticipated that there would be a low single-digit percentage adverse impact on Product Sales and Core EPS. In addition, the Company's foreign-exchange rate sensitivity analysis is contained within the operating and financial review.

 

Footnotes

The following notes refer to pages 1-6:

 

1.   Constant exchange rates. These are financial measures that are not accounted for according to generally-accepted accounting principles (GAAP) because they remove the effects of currency movements from Reported results.

 

2.   Tagrisso, Imfinzi, Lynparza, Calquence, Farxiga, Brilinta, Lokelma, roxadustat, Fasenra, Bevespi and Breztri. These new medicines are pillars in the main therapy areas and are important platforms for future growth.

 

3.   New Cardiovascular (CV), Renal and Metabolism, incorporating Diabetes medicines, Brilinta, Lokelma and roxadustat.

 

4.   Reported financial measures are the financial results presented in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board and adopted by the EU.

 

5.   Core financial measures. These are non-GAAP financial measures because, unlike Reported performance, they cannot be derived directly from the information in the Company Financial Statements. See the operating and financial review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

 

6.   Earnings per share.

 

7.   Epidermal growth factor receptor.

 

8.   Non-small cell lung cancer.

 

9.   Breast cancer susceptibility genes 1/2.

 

10.  Type-2 diabetes.

 

11.  Chronic kidney disease.

 

12.  Non-dialysis dependent.

 

13.  Chronic lymphocytic leukaemia.

 

14.  Human epidermal growth factor receptor 2.

 

15.  Coronary artery disease.

 

16.  Overall survival.

 

17.  Heart failure.

 

18.  Chronic obstructive pulmonary disease.

 

19.  Systemic lupus erythematosus.

 

Pipeline: anticipated major news flow

Innovation is critical to addressing unmet patient needs and is at the heart of the Company's growth strategy. The focus on research and development is designed to yield strong and sustainable results from the pipeline.

 

Timing

News flow

Q4 2019

-      Imfinzi - unresectable, Stage III NSCLC (PACIFIC): regulatory decision (CN)

-      Imfinzi +/- treme - NSCLC (1st line) (POSEIDON): data readout, regulatory submission

-      Imfinzi +/- treme - SCLC[20]: regulatory submission

-      Lynparza - ovarian cancer (1st line, BRCAm) (SOLO-1): regulatory decision (CN)

-      Lynparza - pancreatic cancer (1st line, BRCAm): regulatory decision (US)

-      selumetinib - NF1[21]: regulatory submission (US)

 

-      roxadustat - anaemia of CKD: regulatory submission (US)

 

-      Symbicort - mild asthma: regulatory submission (CN)

-      PT010 - COPD: regulatory decision (CN)

H1 2020

-      Imfinzi +/- treme - head & neck cancer (1st line): data readout, regulatory submission

-      Imfinzi +/- treme - bladder cancer (1st line) (DANUBE): data readout, regulatory submission

-      Lynparza - breast cancer (BRCAm): regulatory decision (CN)

-      Lynparza - ovarian cancer (1st line) (PAOLA-1): regulatory submission

-      Lynparza - prostate cancer (2nd line, castration-resistant): regulatory submission

-      Lynparza + cediranib - ovarian cancer (2nd line): data readout

-      trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-positive): regulatory decision (US, JP)

-      trastuzumab deruxtecan - advanced/refractory, metastatic gastric cancer (HER2-positive): data readout, regulatory submission (JP)

-      Calquence - CLL: regulatory decision (US)

-      Calquence - CLL: regulatory submission (EU, JP)

-      selumetinib - NF1: regulatory submission (EU)

 

-      Forxiga - T2D CVOT: regulatory decision (CN)

-      Farxiga - HF CVOT: regulatory submission

-      Brilinta - stroke (THALES): data readout

-      Lokelma - hyperkalaemia: regulatory decision (JP, CN)

 

-      Symbicort - mild asthma: regulatory submission (EU)

-      Bevespi - COPD: regulatory decision (CN)

-      PT010 - COPD: regulatory decision (US, EU)

H2 2020

-      Imfinzi - neo-adjuvant NSCLC: data readout

-      Imfinzi - unresectable, Stage III NSCLC (PACIFIC-2): data readout

-      Imfinzi +/- treme - liver cancer (1st line): data readout

-      Lynparza - ovarian cancer (3rd line, BRCAm): regulatory submission (US)

-      Lynparza - pancreatic cancer (1st line, BRCAm): regulatory decision (EU)

 

-      Brilinta - stroke (THALES): regulatory submission

-      Epanova - hypertriglyceridaemia CVOT: data readout

-      roxadustat - anaemia of myelodysplastic syndrome: data readout

 

-      Fasenra - nasal polyposis: data readout

-      PT027 - asthma: data readout

-      tezepelumab - severe asthma: data readout

-      anifrolumab - lupus (SLE): regulatory submission

2021

-      Imfinzi - neo-adjuvant NSCLC: regulatory submission

-      Imfinzi - adjuvant NSCLC: data readout, regulatory submission

-      Imfinzi - unresectable, Stage III NSCLC (PACIFIC-2): regulatory submission

-      Imfinzi - unresectable, Stage III NSCLC (PACIFIC-5): data readout

-      Imfinzi - NSCLC (1st line) (PEARL): data readout, regulatory submission

-      Imfinzi +/- treme - limited-disease stage SCLC: data readout

-      Imfinzi +/- treme - bladder cancer (1st line) (NILE): data readout, regulatory submission

-      Imfinzi +/- treme - liver cancer (1st line): regulatory submission

-      Imfinzi - liver cancer (locoregional): data readout, regulatory submission

-      Imfinzi - biliary tract cancer: data readout

-      Lynparza - adjuvant breast cancer: data readout, regulatory submission

-      Lynparza - prostate cancer (1st line, castration-resistant): data readout, regulatory submission

-      Lynparza + cediranib - ovarian cancer (2nd line): regulatory submission

-      trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-positive, 3rd line+): data readout, regulatory submission

-      trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-positive, 2nd line): data readout

-      trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-low): data readout

 

-      Farxiga - chronic kidney disease: data readout, regulatory submission

-      Epanova - hypertriglyceridaemia CVOT: regulatory submission

-      roxadustat - anaemia of myelodysplastic syndrome: regulatory submission

 

-      Fasenra - nasal polyposis: regulatory submission

-      PT027 - asthma: regulatory submission

-      tezepelumab - severe asthma: regulatory submission

 

Conference call

A conference call and webcast for investors and analysts will begin at 12pm UK time today. Details can be accessed via astrazeneca.com.

 

Reporting calendar

The Company intends to publish its full year and fourth quarter financial results on 14 February 2020.

 

About AstraZeneca

AstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in three therapy areas - Oncology, CVRM and Respiratory. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. For more information, please visit astrazeneca.com and follow the Company on Twitter @AstraZeneca.

 

Investor Relations



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BioPharmaceuticals (CV, Metabolism)

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BioPharmaceuticals (Respiratory), other medicines

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Finance, fixed income

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Corporate access, retail investors

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US toll-free


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Media Relations



Gonzalo Viña


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Rob Skelding

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BioPharmaceuticals

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Other

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Sweden

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US

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Operating and financial review

 

All narrative on growth and results in this section is based on actual exchange rates, unless stated otherwise. Financial figures are in US$ millions ($m), unless stated otherwise. The performance shown in this announcement covers the nine-month period to 30 September 2019 (the year to date or YTD 2019) and three-month period to 30 September 2019 (the quarter or Q3 2019) compared to the nine-month period to 30 September 2018 (YTD 2018) and three-month period to 30 September 2018 (Q3 2018) respectively, unless stated otherwise.

 

Core financial measures, EBITDA, Net Debt, Initial Collaboration Revenue and Ongoing Collaboration Revenue are non-GAAP financial measures because they cannot be derived directly from the Company Condensed Consolidated Financial Statements. Management believes that these non-GAAP financial measures, when provided in combination with Reported results, will provide investors and analysts with helpful supplementary information to understand better the financial performance and position of the Company on a comparable basis from period to period. These non-GAAP financial measures are not a substitute for, or superior to, financial measures prepared in accordance with GAAP. Core financial measures are adjusted to exclude certain significant items, such as:

 

-    Amortisation and impairment of intangible assets, including impairment reversals but excluding any charges relating to IT assets

 

-    Charges and provisions related to restructuring programmes, which includes charges that relate to the impact of restructuring programmes on capitalised IT assets

 

-    Other specified items, principally comprising acquisition-related costs, which include fair-value adjustments and the imputed finance charge relating to contingent consideration on business combinations and legal settlements

 

Details on the nature of Core financial measures are provided on page 76 of the Annual Report and Form 20-F Information 2018. Reference should be made to the reconciliation of Core to Reported financial information and the Reconciliation of Reported to Core financial measures table included in the financial performance section of this announcement.

 

EBITDA is defined as Reported Profit Before Tax after adding back Net Finance Expense, results from Joint Ventures and Associates and charges for Depreciation, Amortisation and Impairment. Reference should be made to the Reconciliation of Reported Profit Before Tax to EBITDA included in the Financial Performance section of this announcement.

 

Net Debt is defined as interest-bearing loans and borrowings and lease liabilities, net of cash and cash equivalents, other investments, and net derivative financial instruments. Reference should be made to Note 3 'Net Debt' included in the Notes to the Interim Financial Statements section of this announcement.

 

Ongoing Collaboration Revenue is defined as Collaboration Revenue excluding Initial Collaboration Revenue (which is defined as Collaboration Revenue that is recognised at the date of completion of an agreement or transaction, in respect of upfront consideration). Ongoing Collaboration Revenue comprises, among other items, royalties, milestone revenue and profit-sharing income. Reference should be made to the Collaboration Revenue table in this operating and financial review.

 

The Company strongly encourages investors and analysts not to rely on any single financial measure, but to review AstraZeneca's financial statements, including the Notes thereto and other available Company reports, carefully and in their entirety.

 

Due to rounding, the sum of a number of dollar values and percentages may not agree to totals.

 

Table 1: Total Revenue

 


YTD 2019

Q3 2019


$m

% change

$m

% change


Actual

CER

Actual

CER

Product Sales

17,315

13

17

6,132

16

18

Collaboration Revenue

405

3

6

274

n/m

n/m








Total Revenue

17,720

13

17

6,406

20

22

 

Table 2: Product Sales

 


YTD 2019

Q3 2019


$m

% of total

% change

$m

% of total

% change


Actual

CER

Actual

CER

Oncology

6,393

37

50

54

2,334

38

46

48










BioPharmaceuticals

7,061

41

9

13

2,432

40

12

14

New CVRM

3,207

19

11

14

1,113

18

8

11

Respiratory

3,854

22

9

13

1,319

22

15

18










Other medicines

3,861

22

(16)

(12)

1,366

22

(9)

(7)










Total

17,315

100

13

17

6,132

100

16

18

 

Specialty-care medicines comprise all Oncology medicines, Brilinta and Fasenra. At 46% of Product Sales (YTD 2018: 35%), specialty-care medicine sales increased by 50% in the year to date (54% at CER) to $8,054m.

 

Table 3: Top-ten medicines by Product Sales

 

Medicine

Therapy area

YTD 2019

Q3 2019

$m

% of total

% change

$m

% of total

% change

Actual

CER

Actual

CER

Tagrisso

Oncology

2,305

13

82

86

891

15

76

78

Symbicort

Respiratory

1,783

10

(7)

(4)

613

10

(1)

1

Brilinta

CVRM

1,153

7

22

26

416

7

24

27

Nexium

Other medicines

1,130

7

(14)

(11)

374

6

(11)

(10)

Farxiga

CVRM

1,124

6

13

17

398

6

12

14

Pulmicort

Respiratory

1,053

6

17

23

337

6

28

31

Imfinzi

Oncology

1,045

6

n/m

n/m

412

7

n/m

n/m

Crestor

CVRM

982

6

(9)

(5)

337

6

(4)

(2)

Lynparza

Oncology

847

5

93

98

327

5

94

96

Faslodex

Oncology

726

4

(4)

(1)

205

3

(20)

(19)











Total


12,149

70

22

26

4,311

70

24

26

 

Table 4: Collaboration Revenue

 


YTD 2019

Q3 2019




% change



% change


$m

% of total

Actual

CER

$m

% of total

Actual

CER

Initial Collaboration Revenue

-

-

-

-

-

-

-

-










Ongoing Collaboration Revenue

405

100

45

49

274

100

n/m

n/m

Royalties

45

11

17

23

13

5

(27)

(25)

Milestones/other

360

89

49

53

261

95

n/m

n/m










Total

405

100

3

6

274

100

n/m

n/m

 

YTD 2019 Ongoing Collaboration Revenue included $260m of Lynparza milestone receipts as part of a collaboration with MSD[22]. Of this, $200m was received in the quarter.

 

Product Sales

 

The performance of new and legacy medicines is shown below, with a geographical split shown in Notes 7 & 8.

 

Table 5: YTD 2019 therapy area and medicine performance

 

Therapy area

Medicine

YTD 2019

$m

% of

total

% change

Actual

CER

Oncology

Tagrisso

2,305

13

82

86

Imfinzi

1,045

6

n/m

n/m

Lynparza

847

5

93

98

Iressa

343

2

(16)

(11)

Calquence

108

1

n/m

n/m

Legacy:





Faslodex

726

4

(4)

(1)

Zoladex

617

4

8

15

Arimidex

174

1

5

10

Casodex

157

1

2

6

Others

68

-

(26)

(24)

Total Oncology

6,393

37

50

54

BioPharmaceuticals: CVRM

Farxiga

1,124

6

13

17

Brilinta

1,153

7

22

26

Bydureon

410

2

(8)

(7)

Onglyza

396

2

-

4

Byetta

83

-

(12)

(10)

Other diabetes

36

-

33

35

Lokelma

6

-

n/m

n/m

Legacy:





Crestor

982

6

(9)

(5)

Seloken/Toprol-XL

570

3

3

10

Atacand

161

1

(20)

(16)

Others

199

1

(13)

(9)

BioPharmaceuticals: total CVRM

5,121

30

3

7

BioPharmaceuticals: Respiratory

Symbicort

1,783

10

(7)

(4)

Pulmicort

1,053

6

17

23

Fasenra

498

3

n/m

n/m

Daliresp/Daxas

157

1

16

17

Duaklir

55

-

(24)

(20)

Tudorza/Eklira

50

-

(45)

(42)

Bevespi

30

-

32

32

Breztri

1

-

n/m

n/m

Others

226

1

(3)

2

BioPharmaceuticals: total Respiratory

3,854

22

9

13

Other medicines

Nexium

1,130

7

(14)

(11)

Synagis

295

2

(29)

(29)

Losec/Prilosec

217

1

3

8

Seroquel XR/IR

151

1

(51)

(49)

Movantik/Moventig

72

-

(15)

(15)

Others

83

-

(54)

(48)

Total other medicines

1,948

11

(22)

(20)


Total Product Sales

17,315

100

13

17

 

 

Table 6: Q3 2019 therapy area and medicine performance

 

Therapy area

Medicine

Q3 2019

$m

% of

total

% change

Actual

CER

Oncology

Tagrisso

891

15

76

78

Imfinzi

412

7

n/m

n/m

Lynparza

327

5

94

96

Iressa

91

1

(31)

(29)

Calquence

44

1

n/m

n/m

Legacy:





Faslodex

205

3

(20)

(19)

Zoladex

226

4

17

21

Arimidex

63

1

15

17

Casodex

52

1

3

5

Others

20

-

(27)

(26)

Total Oncology

2,334

38

46

48

BioPharmaceuticals: CVRM

Farxiga

398

6

12

14

Brilinta

416

7

24

27

Onglyza

127

2

(9)

(7)

Bydureon

127

2

(16)

(16)

Byetta

28

-

(19)

(18)

Other diabetes

14

-

38

44

Lokelma

4

-

n/m

n/m

Legacy:





Crestor

337

6

(4)

(2)

Seloken/Toprol-XL

177

3

(1)

3

Atacand

55

1

(15)

(11)

Others

65

1

(8)

(6)

BioPharmaceuticals: total CVRM

1,749

29

3

6

BioPharmaceuticals: Respiratory

Symbicort

613

10

(1)

1

Pulmicort

337

6

28

31

Fasenra

202

3

n/m

n/m

Daliresp/Daxas

53

1

2

3

Duaklir

18

-

(21)

(19)

Tudorza/Eklira

17

-

(4)

-

Bevespi

10

-

4

4

Breztri

1

-

n/m

n/m

Others

67

1

(5)

-

BioPharmaceuticals: total Respiratory

1,319

22

15

18

Other medicines

Nexium

374

6

(11)

(10)

Synagis

146

2

(11)

(11)

Losec/Prilosec

73

1

10

13

Seroquel XR/IR

82

1

5

6

Movantik/Moventig

25

-

(22)

(23)

Others

31

1

(55)

(59)

Total other medicines

731

12

(12)

(11)


Total Product Sales

6,132

100

16

18

 

Product Sales summary

 

Oncology

Product Sales of $6,393m in the year to date; an increase of 50% (54% at CER). Oncology Product Sales represented 37% of total Product Sales, up from 28% in the first nine months of 2018.

 

Oncology: lung cancer

 

Tagrisso

Tagrisso has been approved and launched in 87 countries, including the US, China, in Europe and Japan for the 2nd-line treatment of patients with Stage IV EGFR T790M[23]-mutated NSCLC. Tagrisso has also been approved in 78 countries, including the US, China, in Europe and Japan for the 1st-line treatment of patients with EGFRm NSCLC; a number of additional regulatory reviews are underway.

 

Product Sales in the year to date of $2,305m represented growth of 82% (86% at CER), partly driven by regulatory approvals and reimbursements in the 1st-line setting. Continued growth was also delivered in the 2nd-line indication in other countries, including in Europe and Emerging Markets.

 

Sales in the US increased by 57% in the year to date to $909m. With a high penetration rate, Tagrisso is now established as the standard of care (SoC) in the 1st-line setting, following regulatory approval in 2018. There was a 17% sequential quarterly increase in US sales of Tagrisso in Q3 2019, reflecting continued underlying demand growth; sales were, however, flattered in the quarter by the impact of gross-to-net and stocking adjustments.

 

In Emerging Markets, Tagrisso sales increased by 108% in the year to date (120% at CER) to $553m, with notable growth in China, after the medicine was added to the NRDL with effect from January 2019 in the 2nd-line setting; it also received 1st-line regulatory approval in China during the period.

 

Sales of Tagrisso in Japan increased by 145% in the year to date to $468m, reflecting the increasing use of Tagrisso as a 1st-line treatment; the medicine has reached a very high penetration rate in Japan. The Asia-Pacific region has a relatively high prevalence of lung-cancer patients with an EGFR mutation; at c.30-40% of the total, this contrasts with c.10-15% in the Western Hemisphere.

 

In Europe, sales of $337m in the year to date represented an increase of 52% (61% at CER), driven by emerging use in the 1st-line setting as more countries granted reimbursement, as well as continued strong levels of demand in the 2nd-line setting.

 

Imfinzi

Imfinzi is approved in 53 countries, including the US, in Europe and Japan for the treatment of patients with unresectable, Stage III NSCLC whose disease has not progressed following platinum-based chemoradiation therapy (CRT). It is also approved for the 2nd-line treatment of patients with locally-advanced or metastatic urothelial carcinoma (bladder cancer) in 11 countries, including the US.

 

Global Product Sales of Imfinzi increased by 182% in the year to date (184% at CER) to $1,045m, of which $759m were in the US, almost entirely for the treatment of unresectable, Stage III NSCLC; sales in the US increased by 118% in the year to date.

 

In Japan, sales of $149m (YTD 2018: $9m) reflected encouraging levels of demand, supported by higher CRT and treatment rates. Sales in Europe of $115m (YTD 2018: $9m) followed recent regulatory approvals and launches; additional regulatory and reimbursement decisions are expected in due course.

 

Iressa

Product Sales in the year to date of $343m; a decline of 16% (11% at CER).

 

Emerging Markets sales were stable in the year to date (up by 6% at CER) to $227m; Iressa entered the NRDL in China in 2017 and remains within the China centralised-procurement programme. Given the growing use of Tagrisso, sales of Iressa declined by 31% to $14m in the US and by 29% (24% at CER) to $61m in Europe. Japan sales amounted to $37m, reflecting a decline of 45%.

 

Oncology: Lynparza

By the end of the period, Lynparza was approved in 65 countries for the treatment of ovarian cancer. Launches for the treatment of metastatic breast cancer took place in the US and Japan in 2018 and regulatory approval was granted in the EU in April 2019. Lynparza has now been approved in 44 countries for the treatment of metastatic breast cancer.

 

Product Sales of Lynparza amounted to $847m in the year to date, an increase of 93% (98% at CER). The strong performance was geographically spread, with launches continuing in Emerging Markets and the Established Rest of World region (RoW). Ongoing MSD co-promotion efforts also contributed to sales.

 

US sales increased by 86% to $432m, driven by the launch in the 1st-line BRCAm ovarian cancer indication at the end of 2018 and increased demand that reflected continued growth in the treatment with Lynparza of patients suffering from ovarian or breast cancer. Lynparza remained the leading medicine in the US in the PARP-inhibitor class, as measured by total prescription volumes in both ovarian and breast cancer.

 

Sales in Europe increased by 52% (61% at CER) to $208m, driven by increasing levels of reimbursement and BRCA-testing rates, as well as the recent 1st-line ovarian- and breast-indication launches. The Company continues to implement a number of launches in the broad, 2nd-line, maintenance ovarian-cancer indication, regardless of BRCAm status.

 

Following the initial launch in April 2018, and the subsequent breast- and 1st-line ovarian-cancer launches in 2019, Japan sales of Lynparza amounted to $91m in the year to date, representing growth of 262% (263% at CER). Emerging Markets sales of $101m, up by 205% (227% at CER), reflected the regulatory approval of Lynparza as a 2nd-line maintenance treatment of patients with ovarian cancer by the China National Medical Products Administration (NMPA), resulting in the subsequent launch of Lynparza in China, the first PARP inhibitor to be approved in the country.

 

Oncology: haematology and other medicines

 

Calquence

Product Sales in the year to date of $108m; an increase of 185%. The overwhelming majority of sales were in the US.

 

Calquence was approved and launched in the US in October 2017. The medicine delivered a promising performance in the year to date, with an increasing number of CLL patients now treated, following compendia inclusion in the National Comprehensive Cancer Network guidelines as Category 1 for relapsed/refractory CLL.

 

Legacy: Faslodex

Product Sales in the year to date of $726m; a decline of 4% (1% at CER).

 

Emerging Markets sales of Faslodex increased by 31% in the year to date (41% at CER) to $145m. US sales declined by 21% to $311m, reflecting the recent launch of multiple generic Faslodex medicines; in Q3 2019, Faslodex sales in the US declined by 55% to $60m. In Europe, where generic competitor medicines are also available, sales in the year to date declined by 2% (up by 4% at CER) to $168m, while in Japan, sales increased by 24% to $97m.

 

Legacy: Zoladex

Product Sales in the year to date of $617m; an increase of 8% (15% at CER).

 

Emerging Markets sales of Zoladex increased by 21% (30% at CER) year to date to $380m. Sales in Europe increased by 1% (7% at CER) to $100m. In the Established RoW region, sales declined by 13% (11% at CER) to $133m, driven by the effects of increased competition.

 

BioPharmaceuticals: CVRM

Total CVRM sales, which include Crestor and other legacy medicines, increased by 3% in the year to date (7% at CER) to $5,121m and represented 30% of total Product Sales (YTD 2018: 32%).

 

New CVRM sales increased by 11% in the year to date (14% at CER) to $3,207m, reflecting strong performances from Farxiga and Brilinta. New CVRM sales represented 19% of Product Sales in the year to date (YTD 2018: 19%).

 

 

CVRM: Diabetes

 

Farxiga

Product Sales of $1,124m in the year to date; an increase of 13% (17% at CER).

 

Emerging Markets sales increased by 40% (50% at CER) to $339m, fuelled by growth in ex-China Emerging Markets. US sales declined by 6% to $396m, impacted by changes in formulary access for competitor medicines. AstraZeneca was granted a label update in the US in Q4 2019 to reflect results from the DECLARE CVOT. The level of sales growth in the US in the year to date was, however, adversely impacted by gross-to-net adjustments; underlying demand remained strong.

 

Sales in Europe increased by 18% (26% at CER) to $273m. In Japan, sales to the collaborator, Ono Pharmaceutical Co., Ltd, which records in-market sales, increased by 32% (31% at CER) to $61m.

 

Onglyza

Product Sales of $396m in the year to date; a stable performance (growth of 4% at CER).

 

Sales in Emerging Markets increased by 8% (17% at CER) to $131m, driven by the performance in China. The performance was also supported in the US by favourable prior-year gross-to-net adjustments and improved realised price across the business mix; US sales of Onglyza increased by 7% in the year to date to $174m.

 

Europe sales declined by 22% (17% at CER) to $53m, highlighting the broader trend of a shift away from the dipeptidyl peptidase-4 inhibitor class. Given the significant future potential of Farxiga, the Company continues to prioritise commercial support over Onglyza.

 

Bydureon

Product Sales of $410m in the year to date; a decline of 8% (7% at CER).

 

Sales were partly driven by the impact of production constraints in the first half for the new Bydureon BCise device and declining volumes for the dual-chamber pen. US sales of $340m declined by 5% in the year to date, while Bydureon sales in Europe declined by 19% (14% at CER) to $50m.

 

CVRM: other medicines

 

Brilinta

Product Sales of $1,153m in the year to date; an increase of 22% (26% at CER).

 

Patient uptake continued in the treatment of acute coronary syndrome and high-risk post-myocardial infarction. Emerging Markets sales of Brilinta increased by 50% (59% at CER) to $348m. US sales of Brilinta, at $500m, represented an increase of 22%, driven primarily by increasing levels of demand in both hospital and retail settings, as well as a lengthening in the average-weighted duration of treatment, reflecting the growing impact of 90-day prescriptions. Sales of Brilique in Europe increased by 2% in the year to date (9% at CER) to $262m.

 

Lokelma

Product Sales of $6m in the year to date, predominantly in the US, where Lokelma was recently launched.

 

Lokelma is approved in the US and in the EU for the treatment of hyperkalaemia, a serious condition characterised by elevated potassium levels in the blood associated with CV, renal and metabolic diseases. Launches in a number of other markets are expected soon.

 

Legacy: Crestor

Product Sales of $982m in the year to date; a decline of 9% (5% at CER).

 

Sales in Emerging Markets declined by 2% (up by 4% at CER) to $621m; the CER growth came despite the impact from the aforementioned '4+7' pilot tender scheme in China. US sales declined by 31% to $88m, underlining the ongoing effect of generic Crestor medicines. In Europe, sales declined by 30% (25% at CER) to $112m, reflecting a similar impact that began in Europe in 2017.

 

In Japan, where AstraZeneca collaborates with Shionogi Co. Ltd, sales increased by 3% to $126m. This followed a period of decline resulting from the entry of multiple generic Crestor medicines in the Japan market at the end of 2017.

 

BioPharmaceuticals: Respiratory

Product Sales of $3,854m in the year to date; an increase of 9% (13% at CER). Respiratory represented 22% of total Product Sales (YTD 2018: 23%).

 

Symbicort

Product Sales in the year to date of $1,783m; a decline of 7% (4% at CER).

 

Symbicort continued to lead the global market by volume within the inhaled corticosteroid (ICS) / long-acting beta agonist (LABA) class. Emerging Markets sales of Symbicort increased by 10% (18% at CER) to $401m in the year to date. In contrast, US sales declined by 11% to $585m, reflecting continued pricing pressure and the impact of managed-market rebates. This was partially offset by positive volumes from government-buying patterns.

 

In Europe, sales declined by 14% in the year to date (8% at CER) to $508m, reflecting price competition from other branded and Symbicort-analogue medicines, plus government pricing interventions. Symbicort, however, continued to retain its class-leadership position, with volume growth achieved in a number of markets.

 

In Japan, sales declined by 13% in the year to date (14% at CER) to $131m (Q3 2019: $64m, +26%, +22% at CER); partly reflecting the destocking by Astellas Pharma Co. Ltd (Astellas) following the termination of the co-promotion agreement earlier in the year. In January 2019, AstraZeneca and Astellas announced that the sale and distribution of Symbicort, conducted by Astellas in Japan, was to be transferred back to AstraZeneca and that the co-promotion conducted by Astellas and AstraZeneca was to be terminated on 30 July 2019. Since the termination, the Company has solely distributed and promoted the medicine in Japan.

 

Pulmicort

Product Sales in the year to date of $1,053m; an increase of 17% (23% at CER).

 

Emerging Markets, where sales increased by 23% in the year to date (29% at CER) to $845m, represented 80% of global sales of Pulmicort. China, comprising the overwhelming majority of Pulmicort sales in Emerging Markets, delivered a particularly strong double-digit performance, strengthened by higher levels of demand and underpinned by the impact of AstraZeneca's support in China for over 17,000 nebulisation centres.

 

Sales in the US increased by 10% to $89m due to favourable managed-market rebates and sales in Europe declined by 12% (6% at CER) to $60m reflecting the legacy status of the medicine.

 

Fasenra

Fasenra has been approved in 50 countries, including the US, in the EU and Japan as an add-on maintenance treatment for patients with severe asthma and with an eosinophilic phenotype. The medicine is currently reimbursed in 32 countries, with early-access programmes in an additional 11 countries. At the end of the period, Fasenra led the medicine class for the treatment of severe eosinophilic asthma by new-patient share in a number of key markets. Product Sales of $498m in the year to date represented an increase of 189% (193% at CER).

 

Sales in the US increased by 166% in the year to date to $343m. In Europe and Japan, AstraZeneca was granted regulatory approval in 2018 on a similar basis to that in the US. In Europe, sales of $81m in the year to date represented an increase of 378% (406% at CER). Sales in Japan increased by 138% to $62m in the year to date, following the medicine's launch in 2018.

 

Daliresp/Daxas

Product Sales in the year to date of $157m; an increase of 16% (17% at CER).

 

US sales, representing 85% of the global total, increased by 21% to $134m in the year to date, driven by favourable affordability-programme changes and inventory movements. It is the only oral, selective, long-acting inhibitor of phosphodiesterase-4, an inflammatory enzyme associated with COPD.

 

Duaklir

Product Sales in the year to date of $55m; a decline of 24% (20% at CER).

 

In the first nine months of the year, the overwhelming majority of sales were in Europe, where sales declined by 24% (20% at CER) to $53m; the decline was predominately a result of an adverse performance in Germany. In Q1 2019, the medicine received US regulatory approval. As part of the collaboration agreement announced in March 2017, Circassia Pharmaceuticals plc (Circassia) became responsible for the commercialisation of Duaklir in the US, with AstraZeneca continuing to manufacture and supply the medicine. Circassia communicated making the medicine available to patients in the US in due course.

 

Bevespi

Product Sales in the year to date of $30m; an increase of 32%.

 

Bevespi saw prescriptions in the period track in line with other long-acting muscarinic antagonists / LABA launches; the class in the US, however, continued to grow more slowly than anticipated. Bevespi was the first medicine launched using the Company's proprietary Aerosphere delivery technology.

 

In June 2019, Bevespi received the first approval by the Japanese Ministry of Health, Labour and Welfare as a fixed-dose, long-acting dual bronchodilator in a pressurised metered-dose inhaler (pMDI) to relieve symptoms in patients with COPD.

 

Breztri

Product Sales in the year to date of $1m.

 

In June 2019, Breztri, formerly PT010, was approved in Japan as a triple-combination therapy to relieve symptoms of COPD. This was the first global regulatory approval for Breztri and was the first approval by the Japanese Ministry of Health, Labour and Welfare of a triple-combination therapy in a pressurised metered-dose inhaler (pMDI).

 

Other medicines (outside the main therapy areas)

 

Product Sales of $1,948m in the year to date; a decline of 22% (20% at CER), partly reflecting the H1 2019 divestment of US rights to Synagis and the H2 2018 divestment of the prescription medicine rights to Nexium in Europe.

 

Other Product Sales represented 11% of total Product Sales, down from 16% in the first nine months of 2018.

 

Nexium

Product Sales in the year to date of $1,130m; a decline of 14% (11% at CER).

 

Emerging Markets sales of Nexium increased by 10% (16% at CER) to $574m. In Europe, sales declined by 73% (71% at CER) to $49m, reflecting the aforementioned divestment. Sales in the US declined by 30% to $175m, reflecting its 2015 loss of exclusivity and, in Japan, where AstraZeneca collaborates with Daiichi Sankyo Company, Limited (Daiichi Sankyo), sales declined by 6% (5% at CER) to $291m.

 

Regional Product Sales

 

Table 7: Regional Product Sales

 

Global Sales

YTD 2019

Q3 2019

$m

% of total

% change

$m

% of total

% change

Actual

CER

Actual

CER

Emerging Markets

6,074

35

19

26

2,123

35

25

29

China

3,691

21

30

37

1,283

21

35

40

 Ex-China

2,382

14

5

12

839

14

12

15










US

5,688

33

18

18

2,025

33

17

17










Europe

3,168

18

(4)

2

1,139

19

1

4










Established RoW

2,385

14

17

19

845

14

21

19

Japan

1,830

11

29

29

657

11

31

27

Canada

345

2

(4)

(1)

120

2

5

5

Other Established RoW

211

1

(18)

(12)

69

1

(16)

(11)










Total

17,315

100

13

17

6,132

100

16

18

 

Table 8: Regional Product Sales, Emerging Markets

Product Sales of $6,074m in the year to date; an increase of 19% (26% at CER).

 

 Emerging Markets

YTD 2019

Q3 2019

$m

% of total

% change

$m

% of total

% change

Actual

CER

Actual

CER

Oncology

1,665

27

42

51

617

29

45

49










BioPharmaceuticals

3,644

60

16

23

1,240

58

20

24

CVRM

2,225

37

11

18

777

37

16

19

Respiratory

1,419

23

24

31

463

22

28

32










Other medicines

765

13

(4)

1

266

13

10

19










Total Emerging Markets

6,074

100

19

26

2,123

100

25

29

 

New medicines represented 22% of Emerging Markets sales (YTD 2018: 15%). Notable performances included:

 

-    Tagrisso ($553m, +108%, +120% at CER)

-    Lynparza ($101m, +205%, +227% at CER)

-    Brilinta ($348m, +50%, +59% at CER)

-    Farxiga ($339m, +40%, +50% at CER)

 

The performance was also underpinned by the strong sales of a number of other medicines, including:

 

-    Zoladex ($380m, +21%, +30% at CER)

-    Pulmicort ($845m, +23%, +29% at CER)

-    Symbicort ($401m, +10%, +18% at CER)

 

Ex-China Emerging Markets sales increased by 5% in the year to date (12% at CER) to $2,382m and new medicines represented 28% of sales (YTD 2018: 21%). In Q3 2019, ex-China Emerging Markets sales delivered impressive growth, increasing by 12% (15% at CER) to $839m, with new medicines representing 31% of sales (Q3 2018: 22%). The performance was supported by encouraging levels of growth in (ex-China) Asia Pacific, Middle East and Africa, Brazil and Russia.

 

China sales comprised 61% of Emerging Markets sales, increasing by 30% in the year to date (37% at CER) to $3,691m. New medicines, primarily driven by Tagrisso and Lynparza in Oncology and Brilinta and Farxiga in New CVRM, delivered particularly encouraging sales growth. New medicines represented 19% of China sales (YTD 2018: 9%). This performance was augmented by strong sales from Pulmicort, Nexium and Symbicort.

 

During the period, the Chinese National Healthcare Security Administration published the preliminary 2019 NRDL update. The list included one additional AstraZeneca medicine, namely Kombiglyze for Diabetes. As a further result of the update, respiratory medicines, including Symbicort for asthma and COPD and Nexium for acid reflux, had reimbursement restrictions removed. The updated final list is anticipated to be published in Q4 2019, after the conclusion of reimbursement discussions. Since the year 2000, AstraZeneca has had more than 40 medicines added to the NRDL and, from 2012, 15 of the Company's medicines have been admitted to the National Essential Drug List.

 

Table 9: Regional Product Sales, US

Product Sales of $5,688m; an increase of 18% in the year to date.

 

US

YTD 2019

Q3 2019

$m

% of total

% change

$m

% of total

% change

Oncology

2,538

45

57

917

45

40








BioPharmaceuticals

2,805

49

7

964

48

4

CVRM

1,622

29

1

537

27

(6)

Respiratory

1,183

21

15

427

21

20








Other medicines

345

6

(41)

144

7

(6)








Total US

5,688

100

18

2,025

100

17

 

New medicines represented 61% of US Product Sales (YTD 2018: 45%). The performance reflected, in particular, the success of the new Oncology medicines ($2,208m, +84%), including Tagrisso, Imfinzi and Lynparza in Oncology, Brilinta in New CVRM, plus the compelling performance of Fasenra in Respiratory.

 

Table 10: Regional Product Sales, Europe

Product Sales in the year to date of $3,168m; a decline of 4% (up by 2% at CER).

 

 Europe

YTD 2019

Q3 2019

$m

% of total

% change

$m

% of total

% change

Actual

CER

Actual

CER

Oncology

1,027

32

34

42

377

33

44

51










BioPharmaceuticals

1,677

53

(10)

(4)

550

49

(6)

(0)

CVRM

858

27

(8)

(3)

292

26

(3)

2

Respiratory

819

26

(11)

(6)

258

23

(8)

(3)










Other medicines

465

15

(30)

(28)

213

19

(26)

(29)










Total Europe

3,168

100

(4)

2

1,139

100

1

4

 

The performance in Europe partly reflected adverse continued pricing pressures, the impact of the aforementioned divestment of the prescription medicine rights to Nexium in H2 2018 and declining sales of Crestor. New medicines, however, represented 40% of Product Sales (YTD 2018: 27%) and the Europe sales performance continued to improve through 2019. Oncology delivered particularly compelling growth in the year to date, with the following medicines representing 64% of Oncology sales in Europe:

 

-    Tagrisso ($337m, +52% +61% at CER)

-    Lynparza ($208m, +52%, +61% at CER)

-    Imfinzi ($115m, YTD 2018: $9m)

 

This strong performance was also supported by the successes of Brilinta and Forxiga in New CVRM and Fasenra in Respiratory.

 

Table 11: Regional Product Sales, Established RoW

Product Sales in the year to date of $2,385m; an increase of 17% (19% at CER).

 

Established RoW 

YTD 2019

Q3 2019

$m

% of total

% change

$m

% of total

% change

Actual

CER

Actual

CER

Oncology

1,163

49

66

67

423

50

67

63










BioPharmaceuticals

849

36

(3)

(1)

314

37

6

6

CVRM

416

17

(2)

1

143

17

(4)

(3)

Respiratory

433

18

(4)

(2)

171

20

17

16










Other medicines

373

16

(19)

(16)

108

13

(27)

(31)










Total Established RoW

2,385

100

17

19

845

100

21

19

 

New medicines represented 42% of Established RoW sales (YTD 2018: 20%). The performance during the year to date reflected, in particular, the successes of Tagrisso and Imfinzi in Oncology, Forxiga in New CVRM and Fasenra in Respiratory.

 

Japan sales, comprising 77% of total Established RoW sales, increased by 29% in the year to date to $1,830m. New medicines represented 45% of Japan sales (YTD 2018: 21%), particularly reflecting the strong performance of Tagrisso as a 1st-line treatment for patients with EGFRm NSCLC, following regulatory approval in this setting in the third quarter of 2018. Overall, in the year to date, Oncology sales in Japan increased by 69% to $1,057m and represented 58% of Japan sales. This performance was also supported a number of other ongoing successes, including:

 

-    Farxiga ($61m, +32%, +31% at CER)

-    Fasenra ($62m, +138%, +138% at CER)

 

Financial performance

 

Table 12: YTD 2019 Reported Profit and Loss

 


Reported

YTD 2019

YTD 2018

% change

$m

$m

Actual

CER

Product Sales

17,315

15,281

13

17

Collaboration Revenue

405

392

3

6

Total Revenue

17,720

15,673

13

17






Cost of Sales

(3,543)

(3,299)

7

12






Gross Profit

14,177

12,374

15

18

Gross Profit Margin[24]

79.5%

78.4%

+1

+1






Distribution Expense

(247)

(238)

4

10

% Total Revenue

1.4%

1.5%

-

-

R&D Expense

(3,968)

(3,920)

1

5

% Total Revenue

22.4%

25.0%

+3

+3

SG&A Expense

(8,656)

(7,431)

16

20

% Total Revenue

48.9%

47.4%

-1

-1

Other Operating Income & Expense

1,041

1,525

(32)

(31)

% Total Revenue

5.9%

9.7%

-4

-4






Operating Profit

2,347

2,310

2

3

Operating Profit Margin

13.2%

14.7%

-1

-2

Net Finance Expense

(948)

(970)

(2)

6

Joint Ventures and Associates

(91)

(77)

18

21

Profit Before Tax

1,308

1,263

4

(1)

Taxation

(358)

(222)

61

54

Tax Rate

27%

18%



Profit After Tax

950

1,041

(9)

(13)






EPS

$0.79

$0.88

(11)

(15)

 

Table 13: Q3 2019 Reported Profit and Loss

 


Reported

Q3 2019

Q3 2018

% change

$m

$m

Actual

CER

Product Sales

6,132

5,266

16

18

Collaboration Revenue

274

74

n/m

n/m

Total Revenue

6,406

5,340

20

22






Cost of Sales

(1,351)

(1,153)

17

23






Gross Profit

5,055

4,187

21

22

Gross Profit Margin

78.0%

78.1%

-

-1






Distribution Expense

(88)

(73)

20

25

% Total Revenue

1.4%

1.4%

-

-

R&D Expense

(1,346)

(1,279)

5

8

% Total Revenue

21.0%

24.0%

+3

+3

SG&A Expense

(3,199)

(2,423)

32

34

% Total Revenue

49.9%

45.4%

-5

-4

Other Operating Income & Expense

335

439

(24)

(23)

% Total Revenue

5.2%

8.2%

-3

-3






Operating Profit

757

851

(11)

(13)

Operating Profit Margin

11.8%

15.9%

-4

-5

Net Finance Expense

(316)

(330)

(4)

2

Joint Ventures and Associates

(32)

(44)

(27)

(21)

Profit Before Tax

409

477

(14)

(21)

Taxation

(129)

(71)

81

65

Tax Rate

32%

15%



Profit After Tax

280

406

(31)

(36)






EPS

$0.23

$0.34

(33)

(38)

 

Table 14: YTD 2019 reconciliation of Reported Profit Before Tax to EBITDA[25]

 


YTD 2019

YTD 2018

% change


$m

$m

Actual

CER

Reported Profit Before Tax

1,308

1,263

4

(1)

Net Finance Expense

948

970

(2)

6

Joint Ventures and Associates

91

77

18

21

Depreciation, Amortisation and Impairment

2,119

2,091

1

5






EBITDA

4,466

4,401

1

4

 

Table 15: Q3 2019 reconciliation of Reported Profit Before Tax to EBITDA

 


Q3 2019

Q3 2018

% change


$m

$m

Actual

CER

Reported Profit Before Tax

409

477

(14)

(21)

Net Finance Expense

316

330

(4)

2

Joint Ventures and Associates

32

44

(27)

(21)

Depreciation, Amortisation and Impairment

716

698

2

5






EBITDA

1,473

1,549

(5)

(5)

 

Table 16: YTD 2019 reconciliation of Reported to Core financial measures

 


Reported

Restructuring

Intangible Asset

Amortisation & Impairments

Diabetes Alliance

Other[26]

Core[27]

Core

% change

$m

$m

$m

$m

$m

$m

Actual

CER

Gross Profit

14,177

122

69

-

-

14,368

14

18

Gross Profit Margin[28]

79.5%





80.6%

+1

+1










Distribution Expense

(247)

-

-

-

-

(247)

4

10

R&D Expense

(3,968)

82

60

-

-

(3,826)

1

4

SG&A Expense

(8,656)

147

1,009

294

742

(6,464)

4

8

Other Operating Income & Expense

1,041

-

3

-

16

1,060

(7)

(6)










Operating Profit

2,347

351

1,141

294

758

4,891

41

42

Operating Profit Margin

13.2%





27.6%

+5

+5










Net Finance Expense

(948)

-

-

216

153

(579)

3

13

Taxation

(358)

(74)

(240)

(106)

(136)

(914)

68

68










EPS

 $0.79

 $0.22

 $0.69

 $0.31

 $0.60

 $2.61

39

38

 

Table 17: Q3 2019 reconciliation of Reported to Core financial measures

 


Reported

Restructuring

Intangible Asset

Amortisation & Impairments

Diabetes Alliance

Other26

Core27

Core

% change

$m

$m

$m

$m

$m

$m

Actual

CER

Gross Profit

5,055

70

18

-

-

5,143

21

22

Gross Profit Margin28

78.0%





79.4%

-

-1










Distribution Expense

(88)

-

-

-

-

(88)

20

25

R&D Expense

(1,346)

18

7

-

-

(1,321)

6

9

SG&A Expense

(3,199)

37

327

96

533

(2,206)

7

9

Other Operating Income & Expense

335

-

1

-

16

352

(20)

(19)










Operating Profit

757

125

353

96

549

1,880

43

41

Operating Profit Margin

11.8%





29.3%

+5

+4










Net Finance Expense

(316)

-

-

72

52

(192)

(1)

5

Taxation

(129)

(27)

(75)

(35)

(116)

(382)

80

75










EPS

 $0.23

 $0.08

 $0.20

 $0.10

 $0.38

 $0.99

40

36

 

Profit and loss summary

 

a)   Gross Profit

Reported Gross Profit increased by 15% in the year to date (18% at CER) to $14,177m; Core Gross Profit increased by 14% (18% at CER) to $14,368m, reflecting the growth in Product Sales. The calculation of Reported and Core Gross Profit Margin excludes the impact of Collaboration Revenue and any associated costs, thereby reflecting the underlying performance of Product Sales. The Reported Gross Profit Margin increased by one percentage point in the year to date to 80%, partly reflecting the mix of Product Sales; the Core Gross Profit Margin increased by one percentage point to 81%.

 

b)   Operating Expense

Reported Operating Expense increased by 11% in the year to date (15% at CER) to $12,871m and represented 73% of Total Revenue (YTD 2018: 74%). Core Operating Expense increased by 3% (6% at CER) to $10,537m and represented 59% of Total Revenue (YTD 2018: 65%), demonstrating a significant improvement in operating leverage.

 

Reported R&D Expense increased by 1% in the year to date (5% at CER) to $3,968m. Core R&D Expense increased by 1% (4% at CER) to $3,826m, partly a result of investment in the development of the potential new oncology medicine, trastuzumab deruxtecan.

 

Reported SG&A Expense increased by 16% in the year to date (20% at CER) to $8,656m; Core SG&A Expense increased by 4% (8% at CER) to $6,464m, primarily a result of investment in additional colleagues to support the China expansion strategy, as well as further support for new medicines. The difference between the growth of Reported and Core SG&A Expense partly reflected fair-value adjustments arising on acquisition-related liabilities recognised in 2019, as well as an increase in legal provisions.

 

c)   Other Operating Income and Expense

Where AstraZeneca does not retain a significant ongoing interest in medicines or potential new medicines, income from divestments is reported within Other Operating Income and Expense in the Company's financial statements. Reported Other Operating Income and Expense declined by 32% in the year to date (31% at CER) to $1,041m and included:

 

-    $515m, reflecting an agreement to sell US rights to Synagis to Swedish Orphan Biovitrum AB (publ) (Sobi)

-    $243m, as part of an agreement to divest the global commercial rights, excluding China, Japan, the US and Mexico, for Losec and associated brands to Cheplapharm Arzneimittel GmbH (Cheplapharm)

 

Core Other Operating Income and Expense declined by 7% in the year to date (6% at CER) to $1,060m.

 

d)   Operating Profit

Reported Operating Profit increased by 2% in the year to date (3% at CER) to $2,347m, with the growth in Product Sales offset by the aforementioned increase in Reported SG&A Expense and the decline in Other Operating Income & Expense; the Reported Operating Profit Margin declined by one percentage point (two at CER) to 13%. Core Operating Profit increased by 41% (42% at CER) to $4,891m; the Core Operating Profit Margin increased by five percentage points to 28%, demonstrating a significant improvement in operating leverage.

 

e)   Net Finance Expense

Reported Net Finance Expense declined by 2% in the year to date (up by 6% at CER) to $948m. The charge partly reflected higher Net Debt, as well as the effect of the adoption of IFRS 16 (see Note 1). There was also an adverse impact from a higher cost of debt, plus a higher level of discount unwind in respect of the Bristol-Myers Squibb global Diabetes alliance profit-participation liability. Excluding the discount unwind on acquisition-related liabilities, Core Net Finance Expense increased by 3% (13% at CER) to $579m.

 

f)    Profit Before Tax

Reported Profit Before Tax increased by 4% in the year to date (a decline of 1% at CER) to $1,308m, reflecting the growth in Product Sales offset by the aforementioned increase in Reported SG&A Expense and the decline in Other Operating Income & Expense. Core Profit Before Tax increased by 49% (48% at CER) to $4,221m, partly a result of the growth in Product Sales ahead of the growth of Core Operating Expense.

 

 

g)   Taxation

The Reported Tax Rate for the year to date was 27% and the Core Tax Rate was 22% (YTD 2018: 18% and 19%, respectively). These tax rates were higher than the UK Corporation Tax Rate due to the impact of the geographical mix of profits and the impact of collaboration and divestment activity. Taxation paid for the year to date was $965m, representing 74% of Reported Profit Before Tax (YTD 2018: $406m, 32%); the increase primarily reflected the phasing of tax payments between periods and included refunds in FY 2018, following agreement of prior-year liabilities.

 

h)   EPS

Reported EPS of $0.79 in the year to date, based on a weighted-average number of shares of 1,297m, represented a decline of 11% (15% at CER); Core EPS increased by 39% (38% at CER) to $2.61. The difference between the Reported and Core year-on-year performance partly reflected the impact of a favourable $346m legal settlement in YTD 2018 that was recognised as income in Reported Other Operating Income and Expense. It was also a result of an increase in legal provisions and revaluation movements on acquisition-related liabilities in 2019.

 

In April 2019, the Company completed an issue of 44,386,214 new ordinary shares of $0.25 each at a price of £60.50 per share, resulting in an increase in share capital of $11m and an increase in share premium of $3,479m, net of transaction costs of $22m.

 

Table 18: Cash Flow

 


YTD 2019

YTD 2018

Change


$m

$m

$m

Reported Operating Profit

2,347

2,310

37

Depreciation, Amortisation and Impairment

2,119

2,091

28





Increase in Working Capital and Short-Term Provisions

(812)

(1,741)

929

Gains on Disposal of Intangible Assets

(833)

(975)

142

Non-Cash and Other Movements

313

(428)

741

Interest Paid

(575)

(457)

(118)

Taxation Paid

(965)

(406)

(559)





Net Cash Inflow from Operating Activities

1,594

394

1,200

Net Cash Inflow before Financing Activities

879

430

449

Net Cash Outflow from Financing Activities

(1,771)

(312)

(1,459)

 

A Net Cash Inflow from Operating Activities of $1,594m in the year to date compared to an inflow of $394m in YTD 2018, reflecting an underlying improvement in business performance combined with favourable working-capital movements. The improvement in the movement of Working Capital and Short-Term Provisions centred on the release of various provisions and accruals within Trade and Other Payables, including the impact of a number of legal settlements. The favourable performance was partly offset by an increase in Taxation Paid, at $965m (YTD 2018: $406m); the increase reflected the aforementioned phasing of tax payments between periods and included refunds in FY 2018, following agreement of prior-year liabilities.

 

Net Cash Inflows before Financing Activities of $879m compared with an inflow of $430m in YTD 2018. The movement in Net Cash Inflow from Operating Activities was more than offset by changes in the Purchase of Intangible Assets, namely:

 

-    The first of two $675m upfront payments to Daiichi Sankyo as part of the agreement on trastuzumab deruxtecan

-    The impact of a final true-up net payment of $413m to MSD, based on sales of Nexium and Prilosec from 2014 to 2018; this was accrued over the same period

 

A payment from Pfizer, Inc. of $175m was received in the period, recorded within Disposal of Intangible Assets, as part of a prior agreement to sell the commercialisation and development rights to AstraZeneca's late-stage small-molecule antibiotics business in most markets globally outside the US. Reflecting strong sales growth and a pre-defined increase in royalty rates, the cash payment of contingent consideration, in respect of the Bristol-Myers Squibb share of the global Diabetes alliance, amounted to $337m in the year to date (YTD 2018: $247m).

 

As part of the total consideration of $821m included in Disposal of Intangible Assets received in respect of the aforementioned agreement to sell US rights to Synagis, $150m related to the rights to participate in the future cash flows from the US profits or losses for nirsevimab (MEDI8897). This was recognised as financial liability and is presented in Other Payables within Non-current Liabilities. The associated cash flow is presented within Investing Activities.

 

In April 2019, the Company completed an equity placing of $3.5bn, in conjunction with the recent strategic collaboration with Daiichi Sankyo. The purpose of the placing was to fund the initial upfront and near-term milestone commitments arising from the collaboration, as well to strengthen AstraZeneca's balance sheet. The placing was recorded in the second quarter.

 

i)    Capital expenditure

Capital expenditure amounted to $659m in the year to date, compared to $728m in YTD 2018. This included investment in the new AstraZeneca R&D centre on the Biomedical Campus in Cambridge, UK. AstraZeneca is targeting an initial occupation date of late 2020, with an overall full completion of the building expected in late 2021. The Company expects associated capital expenditure of c.$1,270m (c.£980m, translated at average exchange rates in the first half of the year), the majority of which was paid in prior periods. The Company has made significant progress on its transition to Cambridge; as of the end of September 2019, c.3,000 colleagues were based in the city.

 

The Company anticipates of a broadly stable level of total capital expenditure in FY 2019 (FY 2018: $1,043m).

 

Table 19: Debt and capital structure

 


At

30 Sep 2019

At

31 Dec 2018

At

30 Sep 2018


$m

$m

$m

Cash and Cash Equivalents

3,967

4,831

3,420

Other Investments

909

895

860





Cash and Investments

4,876

5,726

4,280





Overdrafts and Short-Term Borrowings

(228)

(755)

(1,092)

Leases[29]

(712)

-

-

Current Instalments of Loans

-

(999)

(1,399)

Loans Due After One Year

(17,218)

(17,359)

(18,422)





Interest-Bearing Loans and Borrowings (Gross Debt)

(18,158)

(19,113)

(20,913)





Net Derivatives

(16)

384

448

Net Debt

(13,298)

(13,003)

(16,185)

 

Capital allocation

The Board's aim is to continue to strike a balance between the interests of the business, financial creditors and the Company's shareholders. After providing for investment in the business, supporting the progressive dividend policy and maintaining a strong, investment-grade credit rating, the Board will keep under review potential investment in immediately earnings-accretive, value-enhancing opportunities.

 

Foreign exchange

The Company's transactional currency exposures on working-capital balances, which typically extend for up to three months, are hedged where practicable using forward foreign-exchange contracts against the individual companies' reporting currency. In addition, the Company's external dividend payments, paid principally in pounds sterling and Swedish krona, are fully hedged from announcement to payment date. Foreign-exchange gains and losses on forward contracts for transactional hedging are taken to profit or loss.

 

Table 20: Currency sensitivities

The Company provides the following currency-sensitivity information:

 


Average Exchange

Rates versus USD


Annual Impact of 5% Strengthening in Exchange Rate versus USD ($m)[30]

Currency

Primary Relevance

FY 2018[31]

YTD 2019[32]

% change

Product Sales

Core Operating Profit

CNY

Product Sales

6.62

6.87

(4)

221

126

EUR

Product Sales

0.85

0.89

(5)

145

66

JPY

Product Sales

110.45

109.07

1

114

74

Other[33]





216

105








GBP

Operating Expense

0.75

0.79

(5)

26

(72)

SEK

Operating Expense

8.69

9.40

(8)

4

(73)

 

Corporate and business development

 

a)   Divestment of rights for Losec

In September 2019, the Company agreed to sell the global commercial rights, excluding China, Japan, the US and Mexico, for Losec (omeprazole) and associated medicines to Cheplapharm. The divestment included medicines containing omeprazole marketed by AstraZeneca or its collaborators under the brand names Acimax, Antra, Mepral, Mopral, Omepral and Zoltum.

 

Losec is a proton pump inhibitor discovered and developed by AstraZeneca, which helps to reduce the amount of acid produced by the stomach in patients with gastrointestinal reflux conditions and ulcers. It has a number of approved indications and is commonly prescribed for patients with gastro oesophageal reflux disease.

 

Cheplapharm paid AstraZeneca $243m on completion of the agreement in the quarter and will also pay sales-contingent milestones of up to $33m across 2021 and 2022. Income arising from the upfront payment was reported in the Company's financial statements within Other Operating Income and Expense. In 2018, Losec sales in the countries covered by the agreement were $98m.

 

b)   Amended collaboration agreement with Ironwood for Linzess in China

In September 2019, AstraZeneca amended its collaboration agreement with Ironwood Pharmaceuticals, Inc. (Ironwood) in mainland China, China Hong Kong and China Macau for Linzess (linaclotide), a first-in-class new treatment for patients with irritable bowel syndrome with constipation. The amended agreement gave AstraZeneca sole responsibility for developing, manufacturing and commercialising Linzess in the above markets.

 

AstraZeneca will pay Ironwood three non-contingent payments, totalling $35m, between 2021 and 2024. In addition, Ironwood could receive up to $90m in milestone payments, contingent on the achievement of certain sales targets. Ironwood will also be eligible for royalties beginning in the mid-single-digit percent, based on the annual net sales of Linzess in the above markets, where Ironwood will no longer jointly funds the development and commercialisation of Linzess or share in the profit from sales.

 

Sustainability

 

AstraZeneca's sustainability ambition has three priority areas[34], aligned with the Company's purpose and business strategy:

 

-    Access to healthcare

-    Environmental protection

-    Ethics and transparency

 

Recent developments and progress against the Company's priorities are reported below:

 

a)   Access to healthcare

During the period, the Company celebrated the fifth anniversary of its HHA programme. HHA is committed to tackling hypertension and the increasing burden of CV disease, with a presence across East and West Africa. By the end of August 2019, HHA had conducted over 12 million blood-pressure screenings and identified over two million elevated readings since launch in 2014, working with collaborators across Kenya, Ethiopia, Tanzania and Ghana.

 

In September 2019, the Company launched its Young Health Programme (YHP) in the Republic of the Union of Myanmar with global collaborator, Plan International UK, a children's charity that strives to advance children's rights and equality for girls. In the US, the Company enhanced its existing country-wide programme by announcing a charitable collaboration with Learning Undefeated, a non-profit organisation that provides life-changing science, technology, engineering and mathematics (STEM) education opportunities for underserved communities. The US programme introduces a new model for YHP, combining a focus on STEM with elements of disease-prevention education. The intention is to make STEM education engaging, accessible and exciting for middle-school students while, at the same time, incorporating important disease prevention and health-promotion lessons and experiments. The addition of the two new programmes brought the total number of active global plans to 19.

 

The YHP selected and provided sponsorships to 25 young people to attend the One Young World 2019 Summit in London, UK in October 2019. The summit brought together delegates from more than 190 countries to highlight and discuss some of the most severe issues facing the next generation and build connections that work towards solutions. The YHP delegation consisted of young leaders in their own right, actively leading efforts to improve the health and wellbeing of young people in their home countries.

 

During the period, the YHP and Plan International UK held a series of workshops with young people in three countries on three continents: Kenya, India and Brazil, to solicit their ideas and opinions on adolescent health and universal health coverage. Their feedback informed the development of a Manifesto on Adolescent Health that AstraZeneca and Plan International UK shared with the UN General Assembly and the first high-level meeting on universal health coverage in September 2019. This vital work formed part of the Company's advocacy work within the YHP and was an important way to include young voices in global-health discourse.

 

b)   Environmental protection

During the period, the Company held a stakeholder workshop in Nairobi, Kenya to discuss policy, education and research needs to address concerns relating to pharmaceuticals in the environment, arising from increasing patient access to medicines in emerging economies where there is inadequate environmental infrastructure and different water use and re-use patterns. The workshop brought together key international experts and opinion leaders.

 

In Emerging Markets, AstraZeneca goes above and beyond local guidelines and conducts research to ensure adherence to the same high standards of behaviour as in more tightly-regulated locations.

 

In September 2019, the Company participated in side-meetings alongside the United Nations General Assembly focused on climate action and access to healthcare. Since June 2018, AstraZeneca has been contributing to the UN Global Compact's Health Is Everyone's Business initiative. In September 2019, Pam Cheng, AstraZeneca Executive Vice President Operations & IT, spoke at the launch event for their Business Leadership Brief for Healthy Planet, Healthy People, linking health and the environment and the need to act on climate change. The brief included AstraZeneca's best-practice examples taken from United Nations Global Compact, Health Case Study.

 

In September 2019, the Company also participated in Climate Week, taking part in events such as The Climate Group's 'Step Up: The Business Case for Greater Government Ambition' panel, as the first pharmaceutical-company member of the global EV100 initiative[35]. The Company is also a member of The Climate Group's RE100 initiative, in collaboration with CDP (formerly the Carbon Disclosure Project), where it has committed to sourcing 100% renewable electricity by 2020 in Europe and the US, and by 2025 for its global operations.

 

c)   Ethics and transparency

During the period, the Company expanded the Bioethics information available on its website. Bioethics refers in the broadest sense to the range of ethical issues that arise from the study and practice of biological and medical science. The Global Standard: Bioethics sets out the fundamental policy principles and practices that apply to each of the subject-matter areas. The Company worked with the Slave-Free Alliance (SFA) on a risk-gap analysis which showed positive management engagement and drive, significant global efforts to drive risk awareness amongst employees, as well as robust third-party risk management and whistleblowing platforms. The SFA also identified opportunities to provide further public information, and to action site audits focused on this risk area. Ongoing external benchmarking is planned in due course.

 

During the period, the Company launched an employee campaign, 'Speak Up - Your Voice Matters' using internal social-media channels. The campaign encouraged honest and open dialogue, and included interactive scenario videos, senior-leader reflections and guides for manager in support of a healthy business culture, where people feel able to make their voices heard.

 

In September 2019, recognising transparency as a foundation of trust with AstraZeneca stakeholders, the Company launched a 'Transparency Map'. This is an interactive tool designed to increase transparency around data on sourcing and suppliers, site environmental and wellbeing programmes, intellectual property and healthcare-professional payment-disclosure practices, and access to healthcare programmes. At present, no other pharmaceutical company has disclosed this level of information in this easily accessible way.

 

d)   Other developments

In September 2019, the Company was recognised for its sustainability efforts in the DJSI, achieving fourth position overall in the pharmaceutical industry. The DJSI is the longest-running, global sustainability-benchmark system and is an in-depth analysis of companies' economic, social and environmental performance. AstraZeneca maintained its 2018 overall score and achieved a perfect score of 100 in the areas of environmental reporting, labour-practice indicators, social reporting and health-outcome contribution. This marked the 18th time the Company has been included in the DJSI.

 

In September 2019, the Company was again named as a member of the FTSE4Good Index Series, ranking in the 94th percentile of the healthcare industry, with perfect scores in climate change, anti-corruption, corporate governance and customer responsibility. Since its inception in 2001, the FTSE4Good Index Series has only included companies that reflect strong Environmental, Social and Governance (ESG) risk-management practices, as measured by an overall ESG rating.

 

 

 

For more details on AstraZeneca's sustainability ambition, approach and targets, please refer to the latest Sustainability Report 2018 and Sustainability Data Summary 2018, available at astrazeneca.com/sustainability.

 

 

 

Research and development

 

A comprehensive data pack comprising AstraZeneca's pipeline of medicines in human trials can be found in the clinical-trials appendix, available on astrazeneca.com. Highlights of developments in the Company's late-stage pipeline since the prior results announcement are shown below:

 

Table 21: Update from the late-stage pipeline

 

Regulatory approvals

5

-     Tagrisso - NSCLC (1st line, EGFRm): regulatory approval (CN)

-     Farxiga/Forxiga - T2D CVOT: regulatory approval (US, EU)

-     roxadustat - anaemia of CKD, NDD: regulatory approval (CN)

-     Fasenra Pen - severe eosinophilic asthma; auto-injector and self-administration: regulatory approval (US)

Regulatory submissions and/or acceptances

6

-     Lynparza - pancreatic cancer (BRCAm): regulatory submission acceptance (US, EU)

-     Calquence - CLL: regulatory submission under review (US)

-     trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-positive): regulatory submission acceptance (US, JP); Priority Review designation (US)

-     Brilinta/Brilique - CAD/T2D CVOT: regulatory submission acceptance (US, EU)

Major Phase III data readouts

or other major developments

13

-     Tagrisso - NSCLC (1st line, EGFRm): met Phase III key secondary endpoint (OS)

-     Imfinzi + treme - NSCLC (1st line) (NEPTUNE trial): did not meet Phase III primary endpoint

-     Lynparza - ovarian cancer (1st line) (PAOLA-1): met Phase III primary endpoint

-     Lynparza - prostate cancer (2nd line, castration-resistant): met Phase III primary endpoint

-     Calquence - CLL: Breakthrough Therapy Designation (US)

-     Farxiga - HF CVOT: met Phase III primary endpoint; Fast Track designation (US)

-     Farxiga - CKD: Fast Track designation (US)

-     Qtrilmet - T2D: positive opinion (EU)

-     PT010 - COPD (ETHOS): met Phase III primary endpoint

-     PT010 - COPD: complete response letter (US)

-     Fasenra - eosinophilic oesophagitis: Orphan Drug Designation (US)

-     anifrolumab - SLE (TULIP 2): met Phase III primary endpoint

New molecular

entities and major lifecycle medicines in Phase III trials or under regulatory review

16

Oncology

-     Tagrisso - NSCLC

-           Imfinzi - multiple cancers

-     Lynparza - multiple cancers

-     trastuzumab deruxtecan - breast and other cancers

-     capivasertib - breast cancer

-     Calquence - blood cancers

-     tremelimumab - multiple cancers

-     selumetinib - NF1[36]

-     savolitinib - NSCLC36

CVRM

-     roxadustat - anaemia of CKD

Respiratory (and immunology)

-     Fasenra - multiple indications

-     Breztri - COPD

-     PT027 - asthma

-     tezepelumab - severe asthma

-     nirsevimab - lower respiratory tract infection

-     anifrolumab - lupus

Total projects

in clinical pipeline

144


 

Oncology

 

AstraZeneca has a deep-rooted heritage in Oncology and offers a new generation of medicines that have the potential to transform patients' lives and the Company's future. At least six Oncology medicines are expected to be launched between 2014 and 2020, of which Tagrisso, Imfinzi, Lynparza, Calquence and Lumoxiti[37] are already benefitting patients. An extensive pipeline of medicines is in development, and the Company is committed to advancing Oncology medicines, primarily focused on the treatment of patients with lung, ovarian, breast and blood cancers.

 

At the 2019 European Society of Medical Oncology congress (ESMO 2019), the Company presented over 60 abstracts spanning multiple tumour types, including seven oral presentations, with five Presidential presentations and five late-breaking abstracts. Highlights included late-breaking results from the Phase III Lynparza PAOLA-1 trial in 1st-line advanced ovarian cancer, and results of the Phase III Lynparza PROfound trial in metastatic, castrate-resistant prostate cancer (mCRPC), where both trials met their primary endpoint. Positive OS data from the Tagrisso Phase III FLAURA trial in 1st-line EGFRm NSCLC were also presented.

 

The Company presented further evidence of its progress at the 2019 International Association for the Study of Lung Cancer World Congress on Lung Cancer (WCLC) in Barcelona, Spain where Phase III Imfinzi CASPIAN SCLC data were presented in the Presidential Symposium.

 

Oncology: lung cancer

 

a)   Tagrisso

Tagrisso has now received approval in 78 countries, including in the US, Japan, China and in the EU, for the 1st-line treatment of patients with Stage IV EGFRm NSCLC. Regulatory approvals have been achieved in 87 countries, including the US, in the EU, Japan and in China for the 2nd-line treatment of patients with EGFR T790M-mutated NSCLC.

 

In September 2019, AstraZeneca announced that it had received marketing authorisation from the China NMPA for Tagrisso as a 1st-line treatment for adults with locally-advanced or metastatic NSCLC whose tumours have the genetic mutations of EGFR exon 19 deletions or exon 21 (L858R) substitutions. The approval followed the priority-review pathway and was based on results from the Phase III FLAURA trial.

 

During the period, AstraZeneca announced positive OS results from the Phase III FLAURA trial, a randomised, double-blind, multi-centre trial of Tagrisso in previously-untreated patients with locally-advanced or metastatic NSCLC whose tumours have EGFR mutations. Tagrisso showed a statistically significant and clinically meaningful improvement in OS, a key secondary endpoint for Tagrisso versus gefitinib or erlotinib, both of which were previous SoC treatments in this setting (HR[38] 0.799 [95% CI[39], 0.641-0.997], p=0.0462). Tagrisso delivered a median OS of 38.6 months, versus 31.8 months for the comparator arm. At three years, 28% of patients in the Tagrisso arm and only 9% of patients in the comparator arm remained on treatment. Tagrisso also showed a statistically significant and clinically meaningful 52% reduction in the risk of central nervous system (CNS) disease progression, increasing the time patients with CNS metastases lived without CNS-disease progression or death (HR 0.48 [95% CI, 0.26-0.86], p=0.014).

 

Table 22: Key ongoing Tagrisso trials in lung cancer

 

Trial

Population

Design

Timeline

Status

Phase III

ADAURA

Adjuvant EGFRm NSCLC

Placebo or Tagrisso

FPCD[40]

Q4 2015

 

LPCD[41]

Q1 2019

 

First data anticipated

2021+[42]

Recruitment

completed

Phase III

LAURA

Locally-advanced, unresectable EGFRm NSCLC

Placebo or Tagrisso

FPCD

Q3 2018

 

First data anticipated

2021+

Recruitment

ongoing

Phase III

FLAURA2

1st-line EGFRm NSCLC

Tagrisso or Tagrisso + platinum-based chemotherapy doublet

FPCD

Q3 2019

 

First data anticipated

2021+

Recruitment ongoing

Phase II

SAVANNAH

EGFRm, MET+ locally-advanced or metastatic NSCLC patients who have progressed on Tagrisso

Tagrisso + savolitinib

FPCD

Q1 2019

 

First data anticipated

2021+

Recruitment

ongoing

Phase II

ORCHARD

1st-line EGFRm NSCLC post Tagrisso

SoC chemotherapy or Tagrisso + savolitinib or Tagrisso + Iressa or Tagrisso + necitumumab or Imfinzi + chemotherapy

FPCD

Q2 2019

 

First data anticipated

2021+

Recruitment

ongoing

 

b)   Imfinzi

During the period, the Company presented detailed results from the Phase III CASPIAN trial of Imfinzi in patients with previously-untreated extensive-stage SCLC at the aforementioned Presidential Symposium of the International Association for the Study of Lung Cancer WCLC 2019 in Barcelona, Spain. Imfinzi, in combination with four cycles of SoC chemotherapy (etoposide, with either cisplatin or carboplatin), demonstrated a statistically significant and clinically meaningful improvement in OS versus SoC consisting of up to six cycles of chemotherapy and optional prophylactic cranial irradiation. The risk of death was reduced by 27% (equal to a HR of 0.73), with median OS of 13.0 months for Imfinzi plus chemotherapy, versus 10.3 months for SoC.

 

Results showed a prolonged OS benefit, with an estimated 33.9% of patients alive at 18 months following treatment with Imfinzi plus chemotherapy, versus 24.7% of patients following SoC. Across all efficacy endpoints, benefits were observed in patients treated with Imfinzi plus chemotherapy versus SoC. Results showed a significantly higher PFS rate at 12 months (17.5% versus 4.7%), a 10.3% increase in confirmed objective response rate (ORR) (67.9% versus 57.6%), and improved duration of response at 12 months (22.7% versus 6.3%).

This trial also includes a third arm containing tremelimumab, an anti-CTLA4 antibody and potential new medicine, with Imfinzi and chemotherapy. The trial will continue to the final analysis of OS for the combination of dual immune checkpoint blockade with chemotherapy.

 

During the period, AstraZeneca announced final OS results from the Phase III NEPTUNE trial, a randomised, open-label, multi-centre, global trial of Imfinzi in combination with tremelimumab versus SoC platinum-based chemotherapy in previously-untreated Stage IV (metastatic) NSCLC patients. The trial was performed in an 'all-comers' population, and the primary-analysis population was patients with a high tumour mutational burden (TMB). TMB is a measurement of the number of mutations within the genome (DNA) of a tumour, and tumours with high levels of TMB may be more visible to the immune system. In the primary analysis population of patients whose blood TMB was 20 or more mutations per megabase (mut/Mb), the combination of Imfinzi and tremelimumab did not meet the primary endpoint of improving OS, compared to SoC chemotherapy. The safety and tolerability profile for the combination of Imfinzi and tremelimumab was consistent with previous trials.

 

Trial timelines throughout the Imfinzi programme have been updated and optimised to reflect event rates and an effort to optimise the trials to focus on Imfinzi as a monotherapy based on learnings from previous trials.

 

Table 23: Key ongoing Imfinzi trials in lung cancer

 

Trial

Population

Design

Timeline

Status

Phase III

AEGEAN

Neo-adjuvant (before surgery) NSCLC

SoC chemotherapy +/- Imfinzi,

followed by

surgery, followed by placebo or Imfinzi

FPCD

Q1 2019

 

First data anticipated

H2 2020

Recruitment

ongoing

Phase III

ADJUVANT BR.31[43]

Stage Ib-IIIa NSCLC

Placebo or

Imfinzi

FPCD

Q1 2015

 

First data anticipated

2021

Recruitment

ongoing

Phase III

PACIFIC-2

Unresectable, Stage III NSCLC

Concurrent CRT concurrent with

placebo or

Imfinzi, followed

by placebo or

Imfinzi

FPCD

Q2 2018

 

First data anticipated

H2 2020

Recruitment

ongoing

Phase III

PACIFIC-4

Unresectable, Stage I-II NSCLC

Stereotactic

body radiation

therapy followed

by placebo or

Imfinzi

FPCD

Q2 2019

 

First data anticipated

2021+

Recruitment

ongoing

Phase III

PACIFIC-5

Unresectable, Stage III NSCLC

(predominantly Asia)

Concurrent or sequential CRT,

followed by

placebo or

Imfinzi

FPCD

Q1 2019

 

First data anticipated

2021

Recruitment

ongoing

Phase III

ADRIATIC

Limited-disease stage SCLC

Concurrent CRT,

followed by

placebo or

Imfinzi or Imfinzi + treme

FPCD

Q4 2018

 

First data anticipated

2021

Recruitment

ongoing

Phase III

PEARL

Stage IV, 1st-line NSCLC (Asia)

SoC chemotherapy or Imfinzi

FPCD

Q1 2017

 

LPCD

Q1 2019

 

First data anticipated

2021

Recruitment

completed

Phase III

POSEIDON

Stage IV, 1st-line NSCLC

SoC chemotherapy or SoC + Imfinzi or SoC + Imfinzi + treme

FPCD

Q2 2017

 

LPCD

Q3 2018

 

First data anticipated

Q4 2019

Recruitment completed

Phase III

CASPIAN

Extensive-disease stage SCLC

SoC chemotherapy or SoC + Imfinzi or SoC + Imfinzi + treme

FPCD

Q1 2017

 

LPCD

Q2 2018

OS primary endpoint met for Imfinzi monotherapy arm

 

Imfinzi as a potential new medicine in other tumour types

The Company continues to advance multiple monotherapy trials of Imfinzi and combination trials of Imfinzi with tremelimumab and other potential new medicines in tumour types other than lung cancer.

 

Imfinzi has received regulatory approval for the 2nd-line treatment of patients with locally-advanced or metastatic urothelial carcinoma (bladder cancer) in 11 countries.

 

Table 24: Key Imfinzi trials in tumour types other than lung cancer

 

Trial

Population

Design

Timeline

Status

Phase III

POTOMAC

Non-muscle invasive bladder cancer

SoC BCG[44] or SoC BCG + Imfinzi

FPCD

Q3 2018

 

First data

anticipated

2021+

Recruitment ongoing

Phase III

NIAGARA

Muscle-invasive bladder cancer

Neo-adjuvant cisplatin and gemcitabine SoC chemotherapy or SoC + Imfinzi, followed by adjuvant placebo or Imfinzi

FPCD

Q4 2018

 

First data

anticipated

2021+

Recruitment ongoing

Phase III

EMERALD-1

Locoregional hepatocellular carcinoma (liver cancer)

TACE[45] followed by placebo or TACE + Imfinzi, followed by Imfinzi +

bevacizumab or

TACE + Imfinzi

followed by Imfinzi

FPCD

Q1 2019

 

First data

anticipated

2021

Recruitment ongoing

Phase III

EMERALD-2

Locoregional hepatocellular carcinoma at high risk of recurrence after surgery or radiofrequency ablation

Adjuvant Imfinzi or Imfinzi + bevacizumab

FPCD

Q2 2019

 

First data anticipated

2021+

Recruitment ongoing

Phase III

CALLA

Locally-advanced cervical cancer

CRT or CRT + Imfinzi, followed by placebo or Imfinzi

FPCD

Q1 2019

 

First data anticipated

2021+

Recruitment ongoing

Phase III

DANUBE

Stage IV, 1st-line cisplatin chemotherapy- eligible/ineligible bladder cancer

SoC chemotherapy or Imfinzi or Imfinzi + treme

FPCD

Q4 2015

 

LPCD

Q1 2017

 

First data

anticipated

H1 2020

Recruitment completed

Phase III

NILE

Stage IV, 1st-line cisplatin chemotherapy- eligible bladder cancer

SoC chemotherapy or SoC + Imfinzi or SoC + Imfinzi + treme

FPCD

Q4 2018

 

First data anticipated

2021

Recruitment

ongoing

Phase III

KESTREL

Stage IV, 1st-line HNSCC

SoC or Imfinzi or Imfinzi + treme

FPCD

Q4 2015

 

LPCD

Q1 2017

 

First data

anticipated

H1 2020

Recruitment completed

Phase III

HIMALAYA

Stage IV, 1st-line unresectable hepatocellular carcinoma

Sorafenib or Imfinzi or Imfinzi + treme

FPCD

Q4 2017

 

LPCD

Q3 2019

 

First data

anticipated

H2 2020

Recruitment

completed

Phase III

TOPAZ-1

Stage IV, 1st-line biliary-tract cancer

Gemcitabine and cisplatin SoC chemotherapy or SoC + Imfinzi

FPCD

Q2 2019

 

First data anticipated

2021

Recruitment ongoing

 

Oncology: Lynparza (multiple cancers)

During the period, the Company announced positive data and presented the detailed positive results at the aforementioned ESMO 2019 meeting from the Phase III PAOLA-1 trial in patients with advanced ovarian cancer. The trial, in the 1st-line maintenance setting, compared Lynparza added to SoC bevacizumab versus bevacizumab alone, in women with or without BRCA-gene mutations.

 

Investigator-assessed results showed that Lynparza added to bevacizumab reduced the risk of disease progression or death by 41% (equal to a HR of 0.59) and improved PFS to a median of 22.1 months, versus 16.6 months for those treated with bevacizumab alone. At two years since trial initiation, 46% of patients treated with Lynparza added to bevacizumab showed no disease progression, versus 28% of patients receiving bevacizumab alone.

 

The sensitivity analysis of blinded independent central review (BICR) of PFS was consistent and showed a similar improvement, with a median of 26.1 months for Lynparza added to bevacizumab, versus 18.3 months for bevacizumab alone. The safety and tolerability profiles of Lynparza and bevacizumab were consistent with that known from previous trials for each medicine, and with no detriment to quality of life.

 

AstraZeneca also announced and presented detailed positive results at ESMO 2019 from the Phase III PROfound trial of Lynparza in men with mCRPC who have a homologous recombination repair (HRR) gene mutation and have progressed on prior treatment with new hormonal anticancer treatments, e.g. enzalutamide and abiraterone. Results showed a statistically significant and clinically meaningful improvement with Lynparza in the primary endpoint of radiographic progression-free survival (rPFS), improving the time men with BRCA1/2- or ATM-mutated mCRPC lived without disease progression or death to a median of 7.4 months versus 3.6 months for those treated with abiraterone or enzalutamide. Lynparza reduced the risk of disease progression or death by 66% (equal to a HR of 0.34) for these patients.

 

The trial also met the key secondary endpoint of rPFS in the overall HRR-mutated (HRRm) population, where Lynparza reduced the risk of disease progression or death by 51% (equal to a HR of 0.49) and improved rPFS to a median of 5.8 months, versus 3.5 months for abiraterone or enzalutamide.

 

During the period, the Company received submission acceptances from the US FDA and the European Medicines Agency (EMA) for supplemental New Drug Applications (sNDA) for the use of Lynparza tablets in BRCAm pancreatic cancer. A regulatory decision in the US is anticipated in Q4 2019, while the Company anticipates an EMA decision in H2 2020.

 

Table 25: Key Lynparza trials

 

Trial

Population

Design

Timeline

Status

Phase III

OlympiA

Adjuvant BRCAm breast cancer

SoC placebo or Lynparza

 

FPCD

Q2 2014

 

LPCD

Q2 2019

 

First data anticipated

2021

Recruitment completed

 

Phase III

PROfound

Metastatic castration-resistant 2nd-line+ HRRm prostate cancer

SoC (abiraterone or enzalutamide) or Lynparza

FPCD

Q2 2017

 

LPCD

Q4 2018

Primary endpoint met

Phase III

PAOLA-1[46]

Stage IV, 1st-line

ovarian cancer

Bevacizumab maintenance or

bevacizumab +

Lynparza maintenance

FPCD

Q2 2015

 

LPCD Q2 2018

Primary endpoint met

Phase III

GY004[47]

Recurrent platinum-sensitive ovarian cancer

SoC chemotherapy or cediranib or cediranib + Lynparza

FPCD

Q1 2016

 

First data

anticipated

H1 2020

Recruitment ongoing

Phase II/III

GY00547

Recurrent platinum-resistant/refractory ovarian cancer

SoC chemotherapy or cediranib or cediranib + Lynparza

FPCD

Q2 2016

(Phase II)

 

FPCD

Q1 2019

(Phase III)

 

First data

anticipated

2021+

Recruitment ongoing (Phase III component)

Phase III

DuO-O

Stage IV, 1st-line

ovarian cancer

Chemotherapy +

bevacizumab or

chemotherapy +

bevacizumab +

Imfinzi +/-

Lynparza maintenance

FPCD

Q1 2019

 

First data

anticipated

2021+

Recruitment

ongoing

Phase II

MEDIOLA

Advanced, 2nd-line

gBRCAm[48] ovarian

cancer

 

Stage IV, 1st to 3rd-line

gBRCAm, HER2-

negative breast cancer

 

Stage IV, 2nd-line SCLC

 

Stage IV, 2nd-line

gastric cancer

Lynparza + Imfinzi

FPCD

Q2 2016

 

LPCD

Q1 2019

(all except one cohort)

Recruitment

ongoing in one expansion cohort

 

Initial data from lung, breast, prostate and ovarian-cancer cohorts presented in 2017 and 2018

Phase II

LYNK-002

HRRm advanced solid tumours

Lynparza

FPCD

Q1 2019

Recruitment

ongoing

Phase II

VIOLETTE

Stage IV, advanced, triple-negative breast cancer:

 

-HRRm[49] (BRCA)

-HRRm (non-BRCA)

-Non-HRRm

Lynparza

 

Lynparza + ATR

(AZD6738)

FPCD

Q2 2018

 

First data

anticipated

2021

Recruitment

ongoing

Phase III

PROpel

Stage IV, advanced, castration-resistant prostate cancer

Abiraterone or

abiraterone +

Lynparza

FPCD

Q4 2018

 

First data

anticipated

2021

Recruitment ongoing

Phase II

BAYOU

Stage IV, 1st-line cis-platinum chemotherapy-ineligible urothelial

bladder cancer

Imfinzi or

Imfinzi + Lynparza

FPCD

Q1 2018

 

First data

anticipated

H1 2020

Recruitment ongoing

Phase II

ORION

Stage IV, 1st-line

NSCLC

SoC chemotherapy + Imfinzi, followed by Imfinzi or Imfinzi + Lynparza

maintenance

FPCD

Q1 2019

 

First data anticipated

2021+

Recruitment ongoing

 

Trastuzumab deruxtecan (breast and other cancers)

During the period, the Company announced that the US FDA had accepted for review the Biologics License Application for [fam-] trastuzumab deruxtecan and granted Priority Review designation, with a Prescription Drug User Fee Act (PDUFA) date set for the second quarter of 2020.

 

Table 26: Key trastuzumab deruxtecan trials

 

Trial

Population

Design

Timeline

Status

Phase II

DESTINY-Breast01

Stage IV, HER2-positive (IHC 3+) breast cancer post trastuzumab emtansine

Trastuzumab deruxtecan

FPCD

Q3 2017

 

LPCD

Q3 2018

 

 

Data read out

Q2 2019

 

Breakthrough Therapy Designation (US) status awarded

Phase III

DESTINY-Breast02

Stage IV, HER2-positive (IHC 3+) breast cancer post trastuzumab emtansine

SoC or trastuzumab deruxtecan

FPCD

Q3 2018

 

First data anticipated 2021

Recruitment ongoing

Phase III

DESTINY-Breast03

Stage IV, HER2-positive (IHC 3+) breast cancer

Trastuzumab emtansine or trastuzumab deruxtecan

FPCD Q3 2018

 

First data anticipated

2021

Recruitment ongoing

Phase III

DESTINY-Breast04

Stage IV, HER2-low (IHC 1+/2+) breast cancer

SoC or trastuzumab deruxtecan

FPCD

Q4 2018

 

First data anticipated

2021

Recruitment ongoing

Phase II

DESTINY-Gastric01

Stage IV, HER2-positive (IHC 3+) gastric cancer

SoC or trastuzumab deruxtecan

FPCD Q4 2017

 

LPCD Q2 2019

 

First data anticipated

H1 2020

Recruitment completed

 

Calquence (blood cancers)

During the period, AstraZeneca received regulatory approval for Calquence in relapsed/refractory MCL in Chile, Singapore, Canada and India and announced that the US FDA had granted Breakthrough Therapy Designation for Calquence as a monotherapy treatment for adult patients with CLL, one of the most common types of leukaemia in adults. The agency granted the designation based on positive results from the interim analyses of the ELEVATE-TN and ASCEND Phase III clinical trials. Together, the trials showed that Calquence, alone or in combination, significantly increased the time patients lived without disease progression or death, with safety and tolerability that was consistent with its established profile. The Company also submitted for review to the US FDA the sNDA for the use of Calquence in 1st-line and relapsed/refractory CLL.

 

During the period, Calquence was also assigned Category 1 status as a preferred regimen in the treatment of relapsed/refractory CLL within the US NCCN guidelines.

 

CVRM

 

CVRM forms one of AstraZeneca's main therapy areas and a key growth driver for the Company. By following the science to understand more clearly the underlying links between the heart, kidneys and pancreas, AstraZeneca is investing in a portfolio of medicines to protect organs and improve outcomes by slowing disease progression, reducing risks and tackling co-morbidities. The Company's ambition is to modify or halt the natural course of CVRM diseases and potentially regenerate organs and restore function, by continuing to deliver transformative science that improves treatment practices and CV health for millions of patients.

 

a)   Farxiga (diabetes)

During the period, the US FDA granted approval for Farxiga to include positive CV outcomes and renal data from the Phase III DECLARE-TIMI 58 trial in adults with T2D. The trial enrolled a majority of patients with no existing CV disease. In this trial, Farxiga achieved a statistically significant reduction in the composite endpoint of hospitalisation for HF or CV death versus placebo, one of the two primary efficacy endpoints. There were also fewer major adverse CV events observed with Farxiga for the other primary efficacy endpoint; this did not, however, reach statistical significance. Similarly, the European Commission (EC) approved a similar update to the marketing authorisation for Forxiga.

 

The Company also announced positive results from the landmark Phase III DAPA-HF trial, which showed that Farxiga met the primary composite endpoint with a statistically significant and clinically meaningful reduction of CV death or worsening of HF (defined as hospitalisation or an urgent HF visit), compared to placebo. The trial was conducted in patients with reduced ejection fraction on SoC treatment, including those with and without T2D. The safety profile of Farxiga in the DAPA-HF trial was consistent with the well-established safety profile of the medicine.

 

Detailed results of the DAPA-HF trial were presented at the recent European Society of Cardiology (ESC) Congress in Paris, France, showing that Farxiga reduced the composite of CV death or worsening of HF by 26% (p<0.0001). Each of the individual components of the composite endpoint was statistically significant, with a 30% decline (p<0.0001) in the risk of experiencing a first episode of worsening HF and an 18% decline (p=0.0294) in the risk of dying from CV causes. The effect of Farxiga on the primary composite endpoint was generally consistent across the key subgroups examined.

 

In September 2019, the Company announced that the US FDA had granted Fast Track designation for the development of Farxiga to reduce the risk of CV death, or the worsening of HF, in adults with HF with reduced ejection fraction or preserved ejection fraction. This followed the announcement in August 2019 that the US FDA had granted Fast Track designation for Farxiga to delay the progression of renal failure and prevent CV and renal deaths in patients with CKD.

 

b)   Qtrilmet (T2D)

During the period, the Company announced that it had received a positive Committee for Medicinal Products for Human Use (CHMP) opinion for Qtrilmet (metformin, Forxiga and Onglyza) modified-release tablets for marketing authorisation in the European Union for the treatment of adults with T2D. The CHMP is the EMA committee responsible for human medicines. The committee recommended the marketing authorisation for Qtrilmet to improve glycaemic control when metformin with or without sulphonyl urea and either Onglyza and Forxiga does not provide adequate glycaemic control, or when T2D patients are already being treated with metformin, Onglyza and Forxiga. Qtrilmet is approved in the US under the name Qternmet XR as an adjunct to diet and exercise to improve glycaemic control in adults with T2D.

 

c)   Brilinta (CV disease)

At the aforementioned ESC meeting, AstraZeneca also presented detailed data from the positive Phase III THEMIS trial, which showed that Brilinta reduced the risk of CV events in patients with CAD and T2D. In the trial, Brilinta plus aspirin reduced the relative risk for the composite of CV death, heart attack or stroke by 10%, compared with aspirin alone; this was a statistically significant reduction. The overall THEMIS trial population consisted of patients with CAD and T2D with no prior heart attack or stroke. Additionally, in a clinically meaningful and prespecified sub-analysis of patients who had previously undergone a percutaneous coronary intervention (PCI), a procedure to open a blocked or narrowed coronary artery, a 15% relative-risk reduction was observed for Brilinta plus aspirin for the composite of CV death, heart attack, or stroke, compared with aspirin alone. The safety profile for Brilinta was consistent with the known profile of the medicine, with an increased risk of bleeding events observed in both THEMIS and the THEMIS-PCI sub-analysis.

 

During the period, the Company received submission acceptances from both the US FDA (PDUFA date in Q2 2019) and the EMA to include THEMIS data in the label for Brilinta.

 

Table 27: Key large CVRM trials

Major CVRM outcomes trials are highlighted in the following table:

 

Trial

Population

Design

Primary endpoint(s)

Timeline

Status

Farxiga


Phase III

DECLARE

c.17,000[50] patients with T2D

Arm 1: Farxiga 10mg QD[51] + SoC QD

 

Arm 2: placebo + SoC for T2D

Superiority for MACE[52] or superiority for the composite endpoint of CV death or hHF[53]

FPCD

Q2 2013

Primary safety endpoint met

 

One of two primary efficacy endpoints met

Phase III

DAPA-HF

c.4,500 patients with HF and reduced ejection fraction, with and without T2D

Arm 1: Farxiga 10mg or 5 mg QD + SoC

 

Arm 2: placebo + SoC

Time to first occurrence of CV death or hHF or an urgent HF visit

FPCD

Q1 2017

 

 LPCD

Q3 2018

Data read out Q3 2019

 

Primary

endpoint met

 

Fast Track designation (US)

Phase III

DELIVER

c.4,700 patients with HF and preserved ejection fraction, with and without T2D

Arm 1: Farxiga 10mg QD

 

Arm 2: placebo

Time to first occurrence of CV death or worsening HF

FPCD

Q3 2018

 

First data anticipated 2021+

 

Recruitment ongoing

 

Fast Track designation (US)

 

Phase III

DAPA-CKD

c.4,000 patients with CKD, with and without T2D

Arm 1: Farxiga 10mg or 5mg QD

 

Arm 2: placebo

Time to first occurrence of ≥ 50% sustained decline in eGFR or reaching ESRD[54] or CV death or renal death

FPCD

Q1 2017

 

LPCD

Q1 2019

 

First data anticipated 2021

Recruitment completed

 

Fast Track designation (US)

Brilinta


Phase III THEMIS

c.19,000 patients with T2D and CAD without a history of MI[55] or stroke

Arm 1: Brilinta 60mg BID[56]

 

Arm 2: placebo BID on a background of acetylsalicylic acid if not contra-indicated or not tolerated

Composite of CV death, non-fatal MI and non-fatal stroke

FPCD

Q1 2014

 

LPCD

Q2 2016

Primary endpoint met

Phase III

THALES

c.11,000 patients with acute ischaemic stroke or transient ischaemic attack

Arm 1: Brilinta 90mg BID

 

Arm 2: placebo BID on a background of acetylsalicylic acid if not contra-indicated or not tolerated

Prevention of the composite of subsequent stroke and death at 30 days

FPCD

Q1 2018

 

First data anticipated

H1 2020

Recruitment ongoing

Epanova


Phase III

STRENGTH

c.13,000 patients with mixed dyslipidaemia/ hypertriglycerid-aemia

Arm 1: Epanova 4g QD + statin

 

 Arm 2: placebo (corn oil) + statin

Time to first occurrence of CV death, non-fatal MI or non-fatal stroke

FPCD Q4 2014

 

LPCD Q2 2017

 

First data anticipated

H2 2020

Recruitment completed

 

d)   Roxadustat (anaemia)

In August 2019, AstraZeneca announced that its partner FibroGen (China) Medical Technology Development Co., Ltd. (FibroGen China) received marketing authorisation for roxadustat in China for the treatment of anaemia caused by CKD in NDD patients. The approval, granted by the China NMPA, was primarily supported by a Phase III trial in NDD-CKD patients with anaemia, in which roxadustat demonstrated a statistically significant improvement in haemoglobin levels from baseline, averaged over weeks seven to nine of treatment, with a mean change of 1.9g/dL, compared to 0.4g/dL with placebo. These data were published in The New England Journal of Medicine in July 2019.

 

This followed the approval of roxadustat in China in December 2018 for anaemia caused by CKD in patients on dialysis. AstraZeneca and FibroGen China expect to launch roxadustat in China in due course; the Company and FibroGen, Inc. (FibroGen) anticipate a US FDA regulatory submission in the final quarter of 2019.

 

In September 2019, FibroGen and Astellas announced the Japanese approval of roxadustat for the treatment of dialysis patients with anaemia caused by CKD. The medicine will be marketed in Japan as Evrenzo by FibroGen and Astellas. AstraZeneca does not participate in the agreement between FibroGen and Astellas.

 

In October 2019, FibroGen announced that the results from the AstraZeneca-sponsored Phase III trials, OLYMPUS and ROCKIES, will be presented at the American Society of Nephrology Kidney Week in November 2019 in Washington D.C., US. In addition, FibroGen also confirmed that the pooled efficacy and safety results from the global Phase III programme will be presented at a late-breaker session at the meeting. The accepted abstracts on the individual Phase III roxadustat trials are available here.

 

Respiratory (and immunology)

 

AstraZeneca's Respiratory focus is aimed at transforming the treatment of patients with asthma and COPD through:

 

-    Combined inhaled therapies and biologic medicines for the unmet medical needs of specific populations

-    An early pipeline focused on disease modification

 

The growing range of medicines includes a number of anticipated launches between 2017 and 2020; of these, Bevespi, Fasenra and Breztri are already benefitting patients, with regulatory reviews for Symbicort as an anti-inflammatory reliever in mild asthma, and additional reviews for Breztri in COPD underway. The capability in inhalation technology spans both pMDI and dry-powder inhalers to serve patient needs.

 

During the period, AstraZeneca attended the European Respiratory Society International Congress in Madrid, Spain. The breadth and depth of the Company's science was reflected in the 65 abstracts accepted, including 17 oral presentations. The data presented at the congress primarily focused on Symbicort in mild to moderate asthma, and Breztri and Fasenra in COPD.

 

a)   Symbicort (asthma)

During the period, Symbicort Turbuhaler was approved in Canada, Chile and Singapore as an anti-inflammatory reliever in mild, persistent asthma. The expanded indication in mild asthma was approved in Australia, New Zealand, Brazil and Russia earlier this year. In July 2019, the regulatory submission in the EU for Symbicort Turbuhaler in mild asthma was withdrawn and a new submission is anticipated during H1 2020.

 

b)   PT010 (COPD)

During the period, AstraZeneca announced positive results from the Phase III ETHOS trial for triple-combination therapy PT010, in patients with moderate to very severe COPD. At the standard, and at half of the budesonide dose, PT010 (budesonide/glycopyrronium/formoterol fumarate 320/14.4/9.6mcg and 160/14.4/9.6mcg, respectively) met its primary endpoint, demonstrating a statistically significant reduction in the rate of moderate or severe exacerbations, compared with dual-combination therapies Bevespi Aerosphere (glycopyrronium/formoterol fumarate 14.4/9.6mcg) and PT009 (budesonide/formoterol fumarate 320/9.6mcg).

 

In the trial, all combination therapies were administered in a pMDI using the innovative Aerosphere delivery technology. The safety and tolerability of PT010 were consistent with the known profiles of the dual comparators. The ETHOS trial results will be presented at a forthcoming medical meeting.

 

In October 2019, AstraZeneca announced that the US FDA had issued a complete response letter regarding the New Drug Application (NDA) for PT010. The application previously submitted to the US FDA by the Company included data from only one Phase III trial, KRONOS. AstraZeneca will work closely with the agency regarding next steps, including submitting for review the aforementioned ETHOS trial, which was not completed at the time the NDA was submitted.

 

PT010 is under regulatory review in the EU and in China, where it has been granted priority-review status by the China NMPA. PT010 has received regulatory approval in Japan, under the name Breztri Aerosphere.

 

c)   Fasenra (severe eosinophilic asthma and eosinophilic oesophagitis)

During the period, AstraZeneca announced that the US FDA had approved the self-administration of Fasenra in a pre-filled, single-use auto-injector (the Fasenra Pen). Fasenra self-administration and the Fasenra Pen were also approved in the EU.

 

In August 2019, the US FDA granted Orphan Drug Designation to Fasenra for the treatment of eosinophilic oesophagitis (EoE), a rare, chronic, inflammatory disease that occurs when eosinophils, a type of white blood cell, accumulate in the oesophagus, causing injury and inflammation. The US FDA grants Orphan Drug Designation status to medicines and potential new medicines intended for the treatment, diagnosis or prevention of rare diseases or disorders that affect fewer than 200,000 patients in the US.

 

Table 28: Key Fasenra trials

 

Trial

Population

Design

Primary endpoint(s)

Timeline

Status

Phase IIIb ANDHI

Severe eosinophilic asthma on SoC

Fasenra 30mg Q8W[57] SC[58]

 

Placebo SC

 

24-week trial

Annual asthma exacerbation rate

FPCD

Q3 2017

 

LPCD

Q1 2019

 

Data anticipated

Q4 2019

Recruitment completed

Phase IIIb PONENTE

Asthmatics (aged 18 years or older) receiving high-dose ICS plus LABA and chronic OCS[59] with or without additional asthma controller(s)

Fasenra 30mg Q8W SC

 

38-week trial

Reduction of OCS dose

FPCD

Q3 2018

 

LPCD

Q3 2019

 

Data anticipated

H2 2020

Recruitment completed

 

Phase III MELTEMI

Asthmatic adults (aged 18-75 years) on ICS plus LABA2 agonist

Fasenra 30mg Q4W SC

 

Fasenra 30mg Q8W SC

Safety and tolerability

FPCD

Q2 2016

 

LPCD

Q1 2017

 

Data anticipated

H2 2020

Recruitment completed

Phase III OSTRO

Patients (aged 18-75 years) with severe bilateral nasal polyposis; symptomatic, despite SoC

Fasenra 30mg Q8W SC

 

Placebo SC

 

56-week trial

Nasal-polyposis burden and reported nasal blockage

FPCD

Q1 2018

 

LPCD

Q2 2019

 

Data anticipated

H2 2020

Recruitment completed

Phase III MIRACLE

Severe eosinophilic asthma (aged 12-75 years) despite background controller medication, medium dose and high dose ICS plus LABA ± chronic OCS (CN)

Fasenra 30mg Q8W SC

 

Placebo SC

 

56-week trial

 Annual asthma-exacerbation rate

FPCD

Q3 2017

 

Data anticipated 2021+

Recruitment ongoing

Phase III RESOLUTE

 Patients with moderate to very severe COPD with a history of frequent COPD exacerbations and elevated peripheral blood eosinophils

Fasenra 100mg Q8W SC

 

Placebo SC

 

56-week trial

Annualised rate of moderate or severe COPD exacerbations

FPCD

Q4 2019

 

Data anticipated 2021+

Recruitment ongoing

Phase III

MANDARA

EGPA

Fasenra 30mg Q4W

 

Mepolizumab 3x100mg Q4W​

 

52-week trial with open-label extension

Proportion of patients who achieve remission, defined as a score[60] =0 and an OCS dose ≤4 mg/day at weeks 36 and 48​

FPCD

Q4 2019

 

Data anticipated

2021+

Recruitment ongoing

 

Orphan Drug Designation (US)

Phase III

NATRON

HES

Fasenra 30mg Q4W

 

Placebo SC

 

24-week trial with open-label extension

Time to HES worsening flare or any cytotoxic and/or immuno-suppressive therapy increase or hospitalisation

FPCD

Q4 2019

 

Data anticipated 2021+

Recruitment ongoing

 

Orphan Drug Designation (US)

Phase III

MESSINA

Eosinophilic oesophagitis

Fasenra 30mg SC Q4W

 

Placebo SC

 

24-week trial with open-label extension

 

Proportion of patients with a histologic response

 

Changes from baseline in dysphagia PRO[61]

Data anticipated 2021+

Initiating

 

Orphan Drug Designation (US)

 

d)   Anifrolumab (lupus)

In August 2019, AstraZeneca announced that the Phase III TULIP 2 trial for anifrolumab, a potential new medicine for the treatment of SLE, met its primary endpoint, achieving a statistically significant and clinically meaningful reduction in disease activity versus placebo, with both arms receiving SoC. The reduction was measured using the British Isles Lupus Assessment Group based Composite Lupus Assessment (BICLA) at week 52. The BICLA requires improvement in all organs with disease activity at baseline, with no new flares.

 

TULIP 2 was the second Phase III trial designed to assess the efficacy and safety of anifrolumab as a treatment for adults with moderate-to-severe SLE. The positive BICLA response in TULIP 2 was consistent with a positive pre-specified analysis of the previous Phase III TULIP 1 trial, which did not meet its primary endpoint of SLE Responder Index 4 (SRI4). Data from TULIP 1 and TULIP 2 will be presented in November 2019 at the American College of Rheumatology Annual Meeting in Atlanta, US.

 

Table 29: Key anifrolumab trials

 

Trial

Population

Design

Primary endpoint(s)

Timeline

Status

Phase II

MUSE

Moderate to severely-active SLE patients on background SoC

300mg i.v.[62] anifrolumab Q4W

 

1,000mg i.v. anifrolumab Q4W

 

Placebo i.v. Q4W

 

52-week trial

Response in SLE responder index, with sustained reduction of OCSs at six months

FPCD

Q1 2012

 

LPCD

Q1 2014

Data read out Q2 2015

 

Primary endpoint met

 

Fast Track designation (US)

Phase III

TULIP 1

Moderate to severely-active SLE patients on background SoC

300mg i.v. anifrolumab Q4W

 

150mg i.v. anifrolumab Q4W

 

Placebo i.v. Q4W

 

52-week trial

Response in SLE

responder index at week 52

FPCD

Q3 2015

 

LPCD

Q3 2017

Data read out Q3 2018

 

Primary endpoint not met

 

Fast Track designation (US)

Phase III

TULIP 2

Moderate to severely-active SLE patients on background SoC

300mg i.v. anifrolumab Q4W

 

Placebo i.v. Q4W

 

52-week trial

Response in BICLA at week 52

FPCD

Q3 2015

 

LPCD

Q3 2017

Data read out Q3 2019

 

Primary endpoint met

 

Fast Track designation (US)

Phase III

TULIP LTE[63]

Moderate to severely active SLE patients on background SoC who have completed a Phase III anifrolumab trial

300mg i.v. anifrolumab Q4W

 

Placebo i.v. Q4W

 

152-week trial

Long-term safety

FPCD

Q2 2016

 

LPCD

Q4 2018

 

Data anticipated

2021+

Recruitment completed

 

Fast Track designation (US)

Phase II

NCT02962960

SLE patients with high interferon type I status and active skin manifestations

150mg SC every other week

 

300mg SC every other week

 

Placebo SC every other week

 

52-week trial

 

 

PK[64]/PD[65], safety, tolerability

FPCD

Q1 2017

 

LPCD

Q4 2017

 

Trial completed

 

Data read out Q1 2018

Phase II

TULIP-LN1

Patients with active, proliferative

LN[66]

900 mg i.v. Q4W for 12 weeks, then 300mg i.v. anifrolumab Q4W for 36 weeks

 

300mg i.v. anifrolumab Q4W

 

Placebo i.v. Q4W

 

52-week trial

Response in proteinuria at week 52

FPCD

Q4 2015

 

LPCD

Q4 2018

 

Data anticipated

2021

Recruitment completed

 

 

 

For more details on the development pipeline, including anticipated timelines for regulatory submission/acceptances, please refer to the latest Clinical Trials Appendix available on astrazeneca.com.

 

 

 

Condensed consolidated statement of comprehensive income - YTD 2019

 


2019

2018

For the nine months ended 30 September

$m

$m

Product Sales

17,315

15,281

Collaboration Revenue

405

392




Total Revenue

17,720

15,673

Cost of sales

(3,543)

(3,299)




Gross Profit

14,177

12,374

Distribution costs

(247)

(238)

Research and development expense

(3,968)

(3,920)

Selling, general and administrative costs

(8,656)

(7,431)

Other operating income and expense

1,041

1,525




Operating profit

2,347

2,310

Finance income

133

112

Finance expense

(1,081)

(1,082)

Share of after-tax losses in associates and joint ventures

(91)

(77)




Profit before tax

1,308

1,263

Taxation

(358)

(222)




Profit for the period

950

1,041




Other comprehensive income



Items that will not be reclassified to profit or loss



Remeasurement of the defined benefit pension liability

(151)

138

Net (losses)/gains on equity investments measured at fair value through other comprehensive income

(136)

159

Fair-value movements related to own credit risk on bonds designated as fair-value through profit or loss

(1)

3

Tax on items that will not be reclassified to profit or loss

21

(65)


(267)

235




Items that may be reclassified subsequently to profit or loss



Foreign exchange arising on consolidation

(385)

(351)

Foreign exchange arising on designating borrowings in net investment hedges

(491)

(449)

Fair-value movements on cash flow hedges

(156)

5

Fair-value movements on cash flow hedges transferred to profit or loss

109

72

Fair-value movements on derivatives designated in net investment hedges

35

7

Costs of hedging

(35)

(36)

Tax on items that may be reclassified subsequently to profit or loss

62

39


(861)

(713)




Other comprehensive loss for the period, net of tax

(1,128)

(478)

Total comprehensive (loss)/income for the period

(178)

563




Profit attributable to:



Owners of the Parent

1,022

1,121

Non-controlling interests

(72)

(80)


950

1,041




Total comprehensive income attributable to:



Owners of the Parent

(107)

644

Non-controlling interests

(71)

(81)


(178)

563




Basic earnings per $0.25 Ordinary Share

$0.79

$0.88

Diluted earnings per $0.25 Ordinary Share

$0.79

$0.88




Weighted average number of Ordinary Shares in issue (millions)

1,297

1,267

Diluted weighted average number of Ordinary Shares in issue (millions)

1,297

1,267

 

Condensed consolidated statement of comprehensive income - Q3 2019

 


2019

2018

For the quarter ended 30 September

$m

$m

Product Sales

6,132

5,266

Collaboration Revenue

274

74




Total Revenue

6,406

5,340

Cost of sales

(1,351)

(1,153)




Gross Profit

5,055

4,187

Distribution costs

(88)

(73)

Research and development expense

(1,346)

(1,279)

Selling, general and administrative costs

(3,199)

(2,423)

Other operating income and expense

335

439




Operating profit

757

851

Finance income

37

34

Finance expense

(353)

(364)

Share of after-tax losses in associates and joint ventures

(32)

(44)




Profit before tax

409

477

Taxation

(129)

(71)




Profit for the period

280

406




Other comprehensive income



Items that will not be reclassified to profit or loss



Remeasurement of the defined benefit pension liability

96

(49)

Net (losses)/gains on equity investments measured at fair value through other comprehensive income

(82)

3

Fair-value movements related to own credit risk on bonds designated as fair value through profit or loss

1

5

Tax on items that will not be reclassified to profit or loss

4

2


19

(39)




Items that may be reclassified subsequently to profit or loss



Foreign exchange arising on consolidation

(299)

(67)

Foreign exchange arising on designating borrowings in net investment hedges

(305)

67

Fair-value movements on cash flow hedges

(113)

(14)

Fair-value movements on cash flow hedges transferred to profit or loss

95

3

Fair-value movements on derivatives designated in net investment hedges

44

11

Costs of hedging

(38)

(3)

Tax on items that may be reclassified subsequently to profit or loss

42

(16)


(574)

(19)




Other comprehensive loss for the period, net of tax

(555)

(58)

Total comprehensive (loss)/income for the period

(275)

348




Profit attributable to:



Owners of the Parent

299

431

Non-controlling interests

(19)

(25)


280

406




Total comprehensive income attributable to:



Owners of the Parent

(257)

374

Non-controlling interests

(18)

(26)


(275)

348




Basic earnings per $0.25 Ordinary Share

$0.23

$0.34

Diluted earnings per $0.25 Ordinary Share

$0.23

$0.34




Weighted average number of Ordinary Shares in issue (millions)

1,312

1,267

Diluted weighted average number of Ordinary Shares in issue (millions)

1,312

1,267

 

Condensed consolidated statement of financial position

 


At 30 Sep 2019

At 31 Dec 2018

At 30 Sep 2018


$m

$m

$m

Assets




Non-current assets




Property, plant and equipment

7,317

7,421

7,591

Right-of-use assets

690

-

-

Goodwill

11,595

11,707

11,729

Intangible assets

21,454

21,959

24,418

Investments in associates and joint ventures

43

89

110

Other investments

1,293

833

1,124

Derivative financial instruments

56

157

449

Other receivables

384

515

708

Deferred tax assets

2,554

2,379

2,206


45,386

45,060

48,335

Current assets




Inventories

3,129

2,890

3,027

Trade and other receivables

5,279

5,574

5,509

Other investments

813

849

808

Derivative financial instruments

9

258

34

Intangible assets

95

-

-

Income tax receivable

228

207

310

Cash and cash equivalents

3,967

4,831

3,420

Assets held for sale

-

982

-


13,520

15,591

13,108

Total assets

58,906

60,651

61,443





Liabilities




Current liabilities




Interest-bearing loans and borrowings

(228)

(1,754)

(2,491)

Lease liabilities

(349)

-

-

Trade and other payables

(12,538)

(12,841)

(10,992)

Derivative financial instruments

(26)

(27)

(33)

Provisions

(401)

(506)

(508)

Income tax payable

(1,234)

(1,164)

(1,224)


(14,776)

(16,292)

(15,248)

Non-current liabilities




Interest-bearing loans and borrowings

(17,218)

(17,359)

(18,422)

Lease liabilities

(363)

-

-

Derivative financial instruments

(55)

(4)

(2)

Deferred tax liabilities

(2,595)

(3,286)

(3,685)

Retirement benefit obligations

(2,392)

(2,511)

(2,267)

Provisions

(990)

(385)

(393)

Other payables

(6,848)

(6,770)

(7,889)


(30,461)

(30,315)

(32,658)

Total liabilities

(45,237)

(46,607)

(47,906)

Net assets

13,669

14,044

13,537

Equity




Capital and reserves attributable to equity holders of the Parent




Share capital

328

317

317

Share premium account

7,919

4,427

4,417

Other reserves

2,052

2,041

2,040

Retained earnings

1,865

5,683

5,162


12,164

12,468

11,936

Non-controlling interests

1,505

1,576

1,601

Total equity

13,669

14,044

13,537

 

Condensed consolidated statement of changes in equity

 


Share capital

Share premium account

Other reserves

Retained earnings

Total attributable to owners of the parent

Non-controlling interests

Total equity


$m

$m

$m

$m

$m

$m

$m

At 1 Jan 2018

317

4,393

2,029

8,221

14,960

1,682

16,642









Adoption of new accounting standards

-

-

-

(91)

(91)

-

(91)

Profit for the period

-

-

-

1,121

1,121

(80)

1,041

Other comprehensive loss

-

-

-

(477)

(477)

(1)

(478)

Transfer to other reserves

-

-

11

(11)

-

-

-

Transactions with owners:








Dividends

-

-

-

(3,542)

(3,542)

-

(3,542)

Issue of Ordinary Shares

-

24

-

-

24

-

24

Share-based payments change for the period

-

-

-

151

151

-

151

Settlement of share plan awards

-

-

-

(210)

(210)

-

(210)









Net movement

-

24

11

(3,059)

(3,024)

(81)

(3,105)









At 30 Sep 2018

317

4,417

2,040

5,162

11,936

1,601

13,537









At 1 Jan 2019

317

4,427

2,041

5,683

12,468

1,576

14,044









Adoption of new accounting standards[67]

-

-

-

54

54

-

54

Profit for the period

-

-

-

1,022

1,022

(72)

950

Other comprehensive loss

-

-

-

(1,129)

(1,129)

1

(1,128)

Transfer to other reserves

-

-

11

(11)

-

-

-

Transactions with owners:








Dividends

-

-

-

(3,583)

(3,583)

-

(3,583)

Issue of Ordinary Shares[68]

11

3,492

-

-

3,503

-

3,503

Share-based payments for the period

-

-

-

154

154

-

154

Settlement of share awards

-

-

-

(325)

(325)

-

(325)









Net movements

11

3,492

11

(3,818)

(304)

(71)

(375)









At 30 Sep 2019

328

7,919

2,052

1,865

12,164

1,505

13,669

 

Condensed consolidated statement of cash flows - YTD 2019

 


2019

2018

For the nine months ended 30 September

$m

$m

Cash flows from operating activities



Profit before tax

1,308

1,263

Finance income and expense

948

970

Share of after-tax losses of associates and joint ventures

91

77

Depreciation, amortisation and impairment

2,119

2,091

Increase in working capital and short-term provisions

(812)

(1,741)

Gains on disposal of intangible assets

(833)

(975)

Fair value movements on contingent consideration arising from business combinations

(13)

(88)

Non-cash and other movements

326

(340)




Cash generated from operations

3,134

1,257

Interest paid

(575)

(457)

Tax paid

(965)

(406)




Net cash inflow from operating activities

1,594

394




Cash flows from investing activities



Payment of contingent consideration from business combinations

(487)

(247)

Purchase of property, plant and equipment

(659)

(728)

Disposal of property, plant and equipment

31

12

Purchase of intangible assets

(1,416)

(234)

Disposal of intangible assets

1,400

842

Movement in profit-participation liability[69]

150

-

Purchase of non-current asset investments

(6)

(46)

Disposal of non-current asset investments

18

24

Movement in short-term investments and fixed deposits

196

434

Payments to associates and joint ventures

(49)

(172)

Interest received

107

151




Net cash (outflow)/inflow from investing activities

(715)

36




Net cash inflow before financing activities

879

430




Cash flows from financing activities



Proceeds from issue of share capital

3,503

24

Issue of loans

500

2,974

Repayment of loans

(1,500)

-

Dividends paid

(3,592)

(3,484)

Hedge contracts relating to dividend payments

4

(67)

Repayment of obligations under leases

(131)

-

Movement in short-term borrowings

(555)

241




Net cash outflow from financing activities

(1,771)

(312)




Net (decrease)/increase in cash and cash equivalents in the period

(892)

118

Cash and cash equivalents at the beginning of the period

4,671

3,172

Exchange rate effects

-

(28)




Cash and cash equivalents at the end of the period

3,779

3,262




Cash and cash equivalents consist of:



Cash and cash equivalents

3,967

3,420

Overdrafts

(188)

(158)





3,779

3,262

 

Notes to the Interim Financial Statements

 

1   Basis of preparation and accounting policies

These unaudited condensed consolidated interim financial statements (Interim Financial Statements) for the nine months ended 30 September 2019 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board (IASB) and adopted by the EU.

 

The unaudited condensed consolidated Interim Financial Statements for the nine months ended 30 September 2019 were approved by the Board of directors on 24 October 2019.

 

The annual financial statements of the Group are prepared in accordance with IFRSs as issued by the IASB and adopted by the EU. Except as noted below, the Interim Financial Statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2018. In addition, from 1 January 2019, AstraZeneca elected to early adopt the October 2018 update to IFRS 3, which changed the definition of a business. The EU has not yet endorsed this update to IFRS 3, but it is considered highly probable that the amendment will be endorsed during 2019 before its effective date of 1 January 2020 with early adoption permitted. The change in definition of a business within IFRS 3 allowed the Group to apply the optional concentration test to perform a simplified assessment of whether an acquired set of activities and assets is or is not a business on a transaction by transaction basis. It is considered that adopting this amendment will provide more reliable and comparable information about certain transactions as it provides more consistency in accounting for substantially similar transactions that under the previous definition may have been accounted for in different ways despite limited differences in substance.

 

IFRS 16

IFRS 16 'Leases' is effective for accounting periods beginning on or after 1 January 2019 and replaces IAS 17 'Leases'. It eliminates the classification of leases as either operating leases or finance leases and, instead, introduces a single lessee accounting model. The adoption of IFRS 16 resulted in the Group recognising lease liabilities, and corresponding 'right-of-use' assets for arrangements that were previously classified as operating leases.

 

The Group's principal lease arrangements are for property, most notably a portfolio of office premises, and for a global car fleet, utilised primarily by our sales and marketing teams. The Group has adopted IFRS 16 using a modified retrospective approach with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings at 1 January 2019. The standard permits a choice on initial adoption, on a lease-by-lease basis, to measure the right-of-use asset at either its carrying amount as if IFRS 16 had been applied since the commencement of the lease, or an amount equal to the lease liability, adjusted for accruals or prepayments. The Group has elected to measure the right-of-use asset equal to the lease liability, with the result of no net impact on opening retained earnings and no restatement of prior period comparatives.

 

Initial adoption resulted in the recognition of right-of-use assets of $722m and lease liabilities of $720m. The weighted average incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 3%.

 

The Group is using one or more practical expedients on transition to leases previously classified as operating leases, including electing to not apply the retrospective treatment to leases for which the term ends within 12 months of initial application, electing to apply a single discount rate to portfolios of leases with similar characteristics, reliance on previous assessments on whether arrangements contain a lease and whether leases are onerous, excluding initial direct costs from the initial measurement of the right-of-use asset, and using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

 

Key judgements made in calculating the initial impact of adoption include determining the lease term where extension or termination options exist. In such instances, all facts and circumstances that may create an economic incentive to exercise an extension option, or not exercise a termination option, have been considered to determine the lease term. Extension periods (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Estimates include calculating the discount rate which is based on the incremental borrowing rate.

 

The Group is applying IFRS 16's low-value and short-term exemptions. While the IFRS 16 opening lease liability is calculated differently from the previous operating lease commitment calculated under the previous standard, there are no material differences between the positions. The adoption of IFRS 16 has had no impact on the Group's net cash flows, although a presentation change has been reflected whereby cash outflows of $131m are now presented as financing, instead of operating. There is an immaterial benefit to Operating profit and a corresponding increase in Finance expense from the presentation of a portion of lease costs as interest costs. Profit before tax, taxation and EPS have not been significantly impacted.

 

IFRIC 23

IFRIC 23 'Uncertainty Over Income Tax Treatments' is effective for accounting periods beginning on or after 1 January 2019 and provides further clarification on how to apply the recognition and measurement requirements in IAS 12 'Income Taxes'. It is applicable where there is uncertainty over income tax treatments. The EU endorsed IFRIC 23 on 24 October 2018. The adoption of IFRIC 23 has principally resulted in an adjustment in the value of tax liabilities because IFRIC 23 requires the Group to measure the effect of uncertainty on income tax positions using either the most likely amount or the expected value amount depending on which method is expected to better reflect the resolution of the uncertainty.

 

The Group has retrospectively applied IFRIC 23 from 1 January 2019 recognising the cumulative effect of initially applying the interpretation as decreases to income tax payable of $51m and to trade and other payables of $3m, and a corresponding adjustment to the opening balance of retained earnings of $54m. There is no restatement of the comparative information as permitted in the interpretation.

 

Collaboration Revenue

Effective from 1 January 2019, the Group updated the presentation of an element of Total Revenue within the Statement of Comprehensive Income and changed the classification of some income to reflect the increasing importance of collaborations to AstraZeneca. Historically, Externalisation Revenue formed part of Total Revenue and only included income arising from collaborative transactions involving AstraZeneca's medicines, whether internally developed or previously acquired. Such income included upfront consideration, milestones receipts, profit share income and royalties, as well as other income from collaborations. The updated category of Collaboration Revenue includes all income previously included within Externalisation Revenue, as well as income of a similar nature arising from transactions where AstraZeneca has acquired an interest in a medicine and as part of the acquisition entered into an active collaboration with the seller. This change is a result of the growing importance of collaborations to AstraZeneca. Income arising from all collaborations, other than product sales, will be recognised within the Collaboration Revenue element of Total Revenue. Historically there has been no collaboration income arising from such acquisitions, and therefore no prior year restatement of financial results is required as a result of this change.

 

Income from royalties and disposals of assets and businesses, where the Group does not retain a significant element of continued interest, continue to be recorded in Other Operating Income and Expense.

 

Legal proceedings

The information contained in Note 5 updates the disclosures concerning legal proceedings and contingent liabilities in the Group's Annual Report and Form 20-F Information 2018.

 

Going concern

The Group has considerable financial resources available. As at 30 September 2019 the Group has $8.1bn in financial resources (cash balances of $4.0bn and undrawn committed bank facilities of $4.1bn, of which $3.4bn is available until April 2022, $0.5bn is available until November 2020 (extendable to November 2021) and $0.2bn is available until December 2019 (extendable to December 2020), with only $0.6bn of debt due within one year). The Group's revenues are largely derived from sales of products which are covered by patents which provide a relatively high level of resilience and predictability to cash inflows, although government price interventions in response to budgetary constraints are expected to continue to adversely affect revenues in many of the mature markets. The Group, however, anticipates new revenue streams from both recently launched medicines and products in development, and the Group has a wide diversity of customers and suppliers across different geographic areas. Consequently, the Directors believe that, overall, the Group is well placed to manage its business risks successfully.

 

On the basis of the above paragraph, the going concern basis has been adopted in these Interim Financial Statements.

 

Financial information

The comparative figures for the financial year ended 31 December 2018 are not the Group's statutory accounts for that financial year. Those accounts have been reported on by the Group's auditors and have been delivered to the registrar of companies; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

 

2   Restructuring costs

Profit before tax for the nine months ended 30 September 2019 is stated after charging restructuring costs of $351m ($271m for the nine months ended 30 September 2018). These have been charged to profit as follows:

 


YTD 2019

YTD 2018

Q3 2019

Q3 2018


$m

$m

$m

$m

Cost of sales

122

77

70

22

Research and development expense

82

95

18

37

Selling, general and administrative costs

147

110

37

26

Other operating income and expense

-

(11)

-

(1)






Total

351

271

125

84

 

3   Net Debt

The table below provides an analysis of net debt and a reconciliation of net cash flow to the movement in net debt. The Group monitors net debt as part of its capital management policy as described in Note 27 of the Annual Report and Form 20-F Information 2018. Net debt is a non-GAAP financial measure.

 


At 1 Jan 2019

Adoption of new accounting standards[70]

Cash Flow

Non-cash & Other

Exchange Movements

At 30 Sep 2019


$m

$m

$m

$m

$m

$m

Non-current instalments of loans

(17,359)

-

-

(15)

156

(17,218)

Non-current instalments of leases

-

(557)

-

189

5

(363)








Total long-term debt

(17,359)

(557)

-

174

161

(17,581)








Current instalments of loans

(999)

-

1,000

(1)

-

-

Current instalments of leases

-

(163)

149

(338)

3

(349)

Commercial paper

(211)

-

211

-

-

-

Bank collateral

(384)

-

347

-

-

(37)

Other short-term borrowings excluding overdrafts

-

-

(3)

-

-

(3)

Overdraft

(160)

-

(34)

-

6

(188)








Total current debt

(1,754)

(163)

1,670

(339)

9

(577)








Gross borrowings

(19,113)

(720)

1,670

(165)

170

(18,158)








Net derivative financial instruments

384

-

(214)

(186)

-

(16)








Net borrowings

(18,729)

(720)

1,456

(351)

170

(18,174)








Cash and cash equivalents

4,831

-

(858)

-

(6)

3,967

Other investments - current

849

-

14

(47)

(3)

813

Other investments - non-current

46

-

-

50

-

96

Cash and investments

5,726

-

(844)

3

(9)

4,876








Net debt

(13,003)

(720)

612

(348)

161

(13,298)

 

Non-cash movements in the period include fair-value adjustments under IFRS 9.

 

Other investments - non-current are included within the balance of $1,293m (31 December 2018: $833m) in the Statement of Financial Position. The equivalent GAAP measure to net debt is 'liabilities arising from financing activities' which excludes the amounts for cash and overdrafts, other investments and non-financing derivatives shown above and includes the Acerta Pharma put-option liability of $2,072m (31 December 2018: $1,838m) shown in non-current other payables.

 

4   Financial instruments

As detailed in the Group's most recent annual financial statements, the principal financial instruments consist of derivative financial instruments, other investments, trade and other receivables, cash and cash equivalents, trade and other payables, leases and interest-bearing loans and borrowings.

 

There have been no changes of significance to the categorisation or fair-value hierarchy classification of our financial instruments from those detailed in the Notes to the Group Financial Statements in the Group's Annual Report and Form 20-F Information 2018.

 

The Group holds certain equity investments that are categorised as Level 3 in the fair-value hierarchy and for which fair-value gains of $63m have been recognised in the nine months to 30 September 2019. These are presented in Net gains on equity investments measured at fair value through other comprehensive income in the Condensed Consolidated Statement of Comprehensive Income.

 

Financial instruments measured at fair value include $2,106m of other investments, $2,635m held in money market funds, $336m of loans designated at fair value through profit or loss, $329m of loans designated in a fair value hedge relationship and ($16m) of derivatives as at 30 September 2019. The total fair value of interest-bearing loans and borrowings at 30 September 2019, which have a carrying value of $18,158m in the Condensed Consolidated Statement of Financial Position, was $20,614m. Contingent consideration liabilities arising on business combinations have been classified under Level 3 in the fair-value hierarchy and movements in fair value are shown below:

 


Diabetes Alliance

2019

Other

 

2019

Total

 

2019

Total

 

2018


$m

$m

$m

$m

At 1 January

3,983

1,123

5,106

5,534

Settlements

(337)

(150)

(487)

(247)

Revaluations

-

(13)

(13)

38

Discount unwind

216

53

269

313






At 30 September

3,862

1,013

4,875

5,638

 

Contingent consideration arising from business combinations is fair valued using decision-tree analysis, with key inputs including the probability of success, consideration of potential delays and the expected levels of future revenues.

 

The contingent consideration balance relating to BMS's share of Global Diabetes Alliance of $3,862m (31 December 2018: $3,983m) would increase/decrease by $386m with an increase/decrease in sales of 10% as compared with the current estimates.

 

5   Legal proceedings and contingent liabilities

AstraZeneca is involved in various legal proceedings considered typical to its business, including litigation and investigations relating to product liability, commercial disputes, infringement of intellectual property rights, the validity of certain patents, anti-trust law and sales and marketing practices. The matters discussed below constitute the more significant developments since publication of the disclosures concerning legal proceedings in the Company's Annual Report and Form 20-F Information 2018 and the Interim Financial Statements for the six months ended 30 June 2019 (the Disclosures). Unless noted otherwise below or in the Disclosures, no provisions have been established in respect of the claims discussed below.

 

As discussed in the Disclosures, for the majority of claims in which AstraZeneca is involved, it is not possible to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of the proceedings. In these cases, AstraZeneca discloses information with respect only to the nature and facts of the cases but no provision is made.

 

In cases that have been settled or adjudicated, or where quantifiable fines and penalties have been assessed and which are not subject to appeal, or where a loss is probable and the Company is able to make a reasonable estimate of the loss, AstraZeneca records the loss absorbed or makes a provision for the best estimate of the expected loss.

 

The position could change over time and the estimates that AstraZeneca has made, and upon which the Company has relied in calculating these provisions are inherently imprecise. There can, therefore, be no assurance that any losses that result from the outcome of any legal proceedings will not exceed the amount of the provisions that have been booked in the accounts. The major factors causing this uncertainty are described more fully in the Disclosures and herein.

 

AstraZeneca has full confidence in, and will vigorously defend and enforce, its intellectual property.

 

Matters disclosed in respect of the third quarter of 2019 and to 24 October 2019

 

Patent litigation

 

Calquence

As previously disclosed, in November 2017, Pharmacyclics LLC (Pharmacyclics, a company in the AbbVie group) filed a patent infringement lawsuit in the US District Court for the District of Delaware (the District Court) against Acerta Pharma and AstraZeneca relating to Calquence. In April 2018, AstraZeneca and Acerta Pharma filed a complaint in the District Court against Pharmacyclics and AbbVie, Inc. alleging that their medicine, ibrutinib, infringes a US patent owned by Acerta Pharma. In November 2018, Janssen Biotech, Inc. intervened as a defendant. In October 2019, the parties agreed to settle these proceedings. A provision has been taken.

 

Brilinta

Patent proceedings outside the US

As previously reported, in Canada, in October 2018, Taro Pharmaceuticals Inc. (Taro) challenged the patents listed on the Canadian Patent Register with reference to Brilinta. AstraZeneca commenced an infringement action against Taro in November 2018. The action was discontinued in September 2019 after Taro withdrew its challenge.

 

Symbicort

US patent proceedings

As previously disclosed in May 2019, AstraZeneca filed a Second Amended Complaint in the Abbreviated NDA (ANDA) litigation pending in the US District Court for the District of Delaware against Mylan Pharmaceuticals Inc. (Mylan) and 3M Company alleging infringement of US Patent No. 10,166,247 (the '247 patent). In October 2019, Mylan sent AstraZeneca a Paragraph IV notice relating to its ANDA in which Mylan asserts that its proposed generic product does not infringe the '247 patent and/or that the '247 patent is invalid and/or unenforceable.

 

In October 2019, the US District Court for the District of Delaware transferred the Delaware action with Mylan and 3M Company to the US District Court for the Northern District of West Virginia.

 

Product-liability litigation

 

Farxiga and Xigduo XR

AstraZeneca has been named as a defendant in individual plaintiff lawsuits claiming physical injury, including Fournier's Gangrene and necrotising fasciitis, from treatment with Farxiga and/or Xigduo XR.

 

Nexium and Losec/Prilosec

Canada proceedings

As previously disclosed, in Canada, in July and August 2017, AstraZeneca was served with three putative class action lawsuits. Two of the lawsuits seek authorisation to represent individual residents in Canada who allegedly suffered kidney injuries from the use of proton pump inhibitors, including Nexium and Losec. In August 2019, the third lawsuit, filed in Quebec, was dismissed.

 

Commercial litigation

Amplimmune

As previously disclosed, in June 2017, AstraZeneca was served with a lawsuit filed by the stockholders' agents for Amplimmune, Inc (Amplimmune) in Delaware State Court that alleges, among other things, breaches of contractual obligations relating to a 2013 merger agreement between AstraZeneca and Amplimmune. The court will hold a summary judgment hearing on 13 November 2019, and trial is scheduled for February 2020.

 

Seroquel XR Antitrust Litigation

In the US, in August and September 2019, AstraZeneca was named in several related, putative class-action lawsuits brought in federal court in the Southern District of New York that were purportedly brought on behalf of classes of direct purchasers or end payors of Seroquel XR and that allege AstraZeneca and generic-medicine manufacturers violated antitrust laws when settling patent litigation related to Seroquel XR.

 

Taxation

As previously disclosed, on 25 April 2019, the EC issued its decision on the State aid review of UK Controlled Foreign Company Group Financing Exemption. The EC concluded that part of the UK measures was unlawful and incompatible State aid and have instructed recovery of the State aid. The UK Government and the Company have appealed the decision. Given the complexities of the ruling, tax legislation and the ongoing appeal, the Company has been unable to estimate reliably any additional liability at this time; this is not, however, expected to be material.

 

6   Subsequent events

In October 2019, an amendment to the share purchase and option agreement (SPOA) with the sellers of Acerta Pharma (originally entered into in December 2015) came into effect, changing certain terms of the SPOA on both the timing and also reducing the maximum consideration that would be required to be made to acquire the remaining outstanding shares of Acerta Pharma if the options are exercised. The payments would be made in similar annual instalments commencing at the earliest from 2022 through to 2024, subject to the options being exercised. The changes to the terms have been reflected in the assumptions used to calculate the amortised cost of the option liability as at 30 September 2019 of $2,072m (30 June 2019: $2,057m, 31 December 2018: $1,838m).

 

In October 2019, AstraZeneca entered into settlement agreements with Pharmacyclics LLC (a company in the AbbVie Group) and Janssen Biotech, Inc resolving all patent litigation between the parties relating to Calquence and ibrutinib. A provision was established as at 30 September 2019.


7   Product Sales analysis - YTD 2019

The table below provides an analysis of year-on-year Product Sales, with Actual and CER growth rates reflecting year-on-year growth. Due to rounding, the sum of a number of dollar values and percentages may not agree to totals.


World

Emerging Markets


US

Europe

Established RoW


YTD 2019

Actual

CER

YTD 2019

Actual

CER


YTD 2019

Actual

YTD 2019

Actual

CER

YTD 2019

Actual

CER


$m

%

%

$m

%

%


$m

%

$m

%

%

$m

%

%

Oncology
















Tagrisso

2,305

82

86

553

n/m

n/m


909

57

337

52

61

506

n/m

n/m

Imfinzi

1,045

n/m

n/m

18

n/m

n/m


759

n/m

115

n/m

n/m

153

n/m

n/m

Lynparza

847

93

98

101

n/m

n/m


432

86

208

52

61

106

n/m

n/m

Iressa

343

(16)

(11)

227

-

6


14

(31)

61

(29)

(24)

42

(45)

(44)

Calquence

108

n/m

n/m

1

-

-


108

n/m

-

-

-

-

-

-

Faslodex*

726

(4)

(1)

145

31

41


311

(21)

168

(2)

4

102

23

23

Zoladex*

617

8

15

380

21

30


5

(16)

100

1

7

133

(13)

(11)

Arimidex*

174

5

10

118

12

19


-

-

21

(7)

(1)

34

(7)

(6)

Casodex*

157

2

6

99

10

17


-

(89)

12

(19)

(13)

46

(7)

(6)

Others

68

(26)

(24)

22

(9)

(5)


-

-

5

(4)

2

42

(34)

(34)

Total Oncology

6,393

50

54

1,665

42

51


2,538

57

1,027

34

42

1,163

66

67

BioPharmaceuticals: CVRM
















Farxiga

1,124

13

17

339

40

50


396

(6)

273

18

26

115

14

16

Brilinta

1,153

22

26

348

50

59


500

22

262

2

9

43

(4)

1

Bydureon

410

(8)

(7)

9

(2)

2


340

(5)

50

(19)

(14)

11

(29)

(25)

Onglyza

396

-

4

131

8

17


174

7

53

(22)

(17)

38

(15)

(12)

Byetta

83

(12)

(10)

8

33

49


52

(6)

14

(35)

(30)

9

(21)

(17)

Other diabetes

36

33

35

1

(36)

(34)


28

21

7

n/m

n/m

1

-

-

Lokelma

6

-

-

-

-

-


6

-

-

-

-

-

-

-

Crestor*

982

(9)

(5)

621

(2)

4


88

(31)

112

(30)

(25)

162

-

1

Seloken/Toprol-XL*

570

3

10

513

4

12


30

(9)

18

16

16

8

(15)

(11)

Atacand*

161

(20)

(16)

117

3

10


8

(28)

22

(65)

(65)

14

(4)

2

Others

199

(13)

(9)

139

(11)

(7)


-

(96)

46

(16)

(12)

15

(23)

(21)

BioPharmaceuticals: total CVRM

5,121

3

7

2,225

11

18


1,622

1

858

(8)

(3)

416

(2)

1

BioPharmaceuticals: Respiratory
















Symbicort

1,783

(7)

(4)

401

10

18


585

(11)

508

(14)

(8)

289

(9)

(7)

Pulmicort

1,053

17

23

845

23

29


89

10

60

(12)

(6)

60

-

1

Fasenra

498

n/m

n/m

4

-

-


343

n/m

81

n/m

n/m

70

n/m

n/m

Daliresp/Daxas

157

16

17

3

(22)

(17)


134

21

19

(4)

2

1

-

3

Duaklir

55

(24)

(20)

1

(4)

-


-

-

53

(24)

(20)

1

(38)

(36)

Tudorza/Eklira

50

(45)

(42)

1

(5)

(3)


1

(98)

44

(18)

(13)

4

(44)

(42)

Bevespi

30

32

32

-

-

-


30

31

-

-

-

-

-

-

Breztri

1

-

-

-

-

-


-

-

-

-

-

1

-

-

Others

226

(3)

2

164

85

96


2

(58)

54

(49)

(47)

6

(82)

(81)

BioPharmaceuticals: total Respiratory

3,854

9

13

1,419

24

31


1,183

15

819

(11)

(6)

433

(4)

(2)

Other medicines
















Nexium

1,130

(14)

(11)

574

10

16


175

(30)

49

(73)

(71)

332

(8)

(7)

Synagis

295

(29)

(29)

-

-

-


36

(73)

258

(8)

(8)

-

-

-

Losec/Prilosec

217

3

8

145

11

17


7

38

45

(12)

(7)

20

(19)

(17)

Seroquel XR/IR

151

(51)

(49)

41

(61)

(60)


27

(71)

67

(17)

(13)

15

(34)

(33)

Movantik/Moventig

72

(15)

(15)

-

-

-


70

(14)

2

(11)

(12)

-

n/m

n/m

Others

83

(54)

(48)

4

(89)

(93)


29

23

44

(36)

(33)

5

(89)

(70)

Total other medicines

1,948

(22)

(20)

765

(4)

1


345

(41)

465

(30)

(28)

373

(19)

(16)

Total Product Sales

17,315

13

17

6,074

19

26


5,688

18

3,168

(4)

2

2,385

17

19

 

*Legacy medicines.

8   Product Sales analysis - Q3 2019

The table below provides an analysis of year-on-year Product Sales, with Actual and CER growth rates reflecting year-on-year growth. Due to rounding, the sum of a number of dollar values and percentages may not agree to totals.


World

Emerging Markets

US

Europe

Established RoW


Q3 2019

Actual

CER

Q3 2019

Actual

CER

Q3 2019

Actual

Q3 2019

Actual

CER

Q3 2019

Actual

CER


$m

%

%

$m

%

%

$m

%

$m

%

%

$m

%

%

Oncology















Tagrisso

891

76

78

224

n/m

n/m

350

47

125

51

56

192

n/m

n/m

Imfinzi

412

n/m

n/m

6

n/m

n/m

286

68

55

n/m

n/m

65

n/m

n/m

Lynparza

327

94

96

42

n/m

n/m

170

n/m

77

54

60

38

92

92

Iressa

91

(31)

(29)

63

(19)

(17)

6

(4)

15

(39)

(34)

8

(67)

(69)

Calquence

44

n/m

n/m

1

-

-

44

(89)

-

-

-

-

-

-

Faslodex

205

(20)

(19)

49

23

25

60

(55)

58

9

14

38

27

24

Zoladex

226

17

21

145

31

36

1

(65)

35

11

19

46

(7)

(7)

Arimidex

63

15

17

46

32

32

-

-

6

(20)

(4)

10

(13)

(12)

Casodex

52

3

5

34

11

14

-

n/m

4

5

24

14

(8)

(13)

Others

20

(27)

(26)

6

(27)

(28)

-

-

2

(11)

4

13

(30)

(29)

Total Oncology

2,334

46

48

617

45

49

917

40

377

44

51

423

67

63

BioPharmaceuticals: CVRM















Farxiga

398

12

14

133

56

59

126

(18)

95

21

26

43

17

18

Brilinta

416

24

27

131

56

61

179

18

91

7

12

15

2

3

Bydureon

127

(16)

(16)

2

(7)

(90)

106

(16)

16

(15)

(3)

3

(48)

(34)

Onglyza

127

(9)

(7)

44

10

18

54

(16)

17

(18)

(16)

12

(23)

(22)

Byetta

28

(19)

(18)

4

98

48

17

(28)

4

(27)

(11)

3

(10)

5

Other diabetes

14

38

44

1

(36)

(34)

11

34

3

n/m

n/m

-

-

-

Lokelma

4

-

-

-

-

-

4

-

-

-

-

-

-

-

Crestor

337

(4)

(2)

214

3

7

34

(11)

37

(23)

(22)

53

(12)

(15)

Seloken/Toprol-XL

177

(1)

3

164

-

3

4

(41)

5

37

38

3

16

29

Atacand

55

(15)

(11)

41

8

12

2

88

7

(67)

(67)

5

9

27

Others

65

(8)

(6)

44

(5)

(8)

-

-

16

(16)

(2)

6

(5)

-

BioPharmaceuticals: total CVRM

1,749

3

6

777

16

19

537

(6)

292

(3)

2

143

(4)

(3)

BioPharmaceuticals: Respiratory















Symbicort

613

(1)

1

138

12

18

203

(6)

154

(13)

(10)

118

15

14

Pulmicort

337

28

31

269

31

35

33

50

16

(13)

(6)

20

10

8

Fasenra

202

n/m

n/m

3

-

-

135

n/m

36

n/m

n/m

28

84

80

Daliresp/Daxas

53

2

3

1

(63)

(57)

45

4

7

20

25

-

-

-

Duaklir

18

(21)

(19)

1

-

-

-

-

17

(26)

(20)

-

-

-

Tudorza/Eklira

17

(4)

-

2

95

97

1

n/m

13

(17)

(13)

1

(27)

(19)

Bevespi

10

4

4

-

-

-

10

1

-

-

-

-

-

-

Breztri

1

-

-

-

-

-

-

-

-

-

-

1

-

-

Others

67

(5)

-

49

76

80

1

(77)

15

(52)

(46)

2

(75)

(72)

BioPharmaceuticals: total Respiratory

1,319

15

18

463

28

32

427

20

258

(8)

(3)

171

17

16

Other medicines















Nexium

374

(11)

(10)

205

13

18

56

(10)

17

(71)

(65)

96

(21)

(24)

Synagis

146

(11)

(11)

-

-

-

1

(83)

144

(7)

(7)

-

-

-

Losec/Prilosec

73

10

13

49

15

18

3

n/m

14

(9)

(3)

7

(8)

(2)

Seroquel XR/IR

82

5

6

17

32

27

40

15

20

(21)

(14)

4

(15)

(13)

Movantik/Moventig

25

(22)

(23)

-

n/m

n/m

25

(17)

-

n/m

n/m

-

n/m

n/m

Others

31

(55)

(59)

(6)

n/m

12

18

9

18

(46)

(81)

-

(99)

n/m

Total other medicines

731

(12)

(11)

266

10

19

144

(6)

213

(26)

(29)

108

(27)

(31)

Total Product Sales

6,132

16

18

2,123

25

29

2,025

17

1,139

1

4

845

21

19

 

9   Sequential quarterly Product Sales - 2019

The table below provides an analysis of sequential quarterly Product Sales, with Actual and CER growth rates reflecting quarter-on-quarter growth. Due to rounding, the sum of a number of dollar values and percentages may not agree to totals.


Q1 2019

Actual

CER

Q2 2019

Actual

CER

Q3 2019

Actual

CER

Q4 2019

Actual

CER


$m

%

%

$m

%

%

$m

%

%

$m

%

%

Oncology













Tagrisso

630

6

5

784

24

25

891

14

13




Imfinzi

295

13

13

338

15

15

412

22

22




Lynparza

237

13

13

283

19

20

327

16

15




Iressa

134

20

19

118

(12)

(13)

91

(23)

(22)




Calquence

29

21

21

35

21

21

44

27

27




Faslodex

254

(6)

(6)

267

5

5

205

(23)

(23)




Zoladex

194

7

5

197

2

2

226

15

16




Arimidex

51

11

9

60

18

20

63

5

5




Casodex

48

4

4

57

19

17

52

(8)

(6)




Others

20

(13)

(17)

28

40

42

20

(27)

(22)




Total Oncology

1,892

7

6

2,167

15

15

2,334

8

8




BioPharmaceuticals: CVRM













Farxiga

349

(12)

(12)

377

8

9

398

5

5




Brilinta

348

(7)

(8)

389

12

12

416

7

8




Onglyza

153

3

3

116

(24)

(24)

127

9

11




Bydureon

142

3

3

141

(1)

(1)

127

(10)

(10)




Byetta

30

(6)

(6)

25

(17)

(17)

28

10

13




Other diabetes

11

(8)

(17)

11

-

8

14

26

22




Lokelma

-

-

-

2

-

-

4

n/m

n/m




Crestor

335

(5)

(6)

310

(7)

(7)

337

9

9




Seloken/Toprol-XL

225

41

39

168

(25)

(25)

177

6

8




Atacand

50

(14)

(15)

56

12

14

55

(1)

(1)




Others

71

(3)

(5)

63

(11)

(8)

65

4

2




BioPharmaceuticals: total CVRM

1,714

(2)

(3)

1,658

(3)

(3)

1,749

5

6




BioPharmaceuticals: Respiratory













Symbicort

585

(8)

(8)

585

-

1

613

5

4




Pulmicort

383

(2)

(2)

333

(13)

(13)

337

1

3




Fasenra

129

3

2

167

29

30

202

21

21




Daliresp/Daxas

48

(11)

(13)

56

17

19

53

(6)

(7)




Tudorza/Eklira

20

5

-

13

(35)

(30)

17

33

37




Duaklir

20

(9)

(9)

17

(15)

(14)

18

7

5




Bevespi

10

-

-

10

-

-

10

4

8




Breztri

-

-

-

-

-

-

1

n/m

n/m




Others

88

(20)

(19)

71

(19)

(23)

67

(6)

(2)




BioPharmaceuticals: total Respiratory

1,283

(6)

(6)

1,252

(2)

(2)

1,319

5

6




Other medicines













Nexium

363

(7)

3

393

8

9

374

(5)

(4)




Losec/Prilosec

76

27

27

68

(11)

(11)

73

8

9




Synagis

53

(79)

(90)

96

81

81

146

52

53




Seroquel XR/IR

37

(34)

(32)

32

(14)

(13)

82

n/m

n/m




Movantik/Moventig

25

-

-

22

(12)

(12)

25

13

13




Others

22

(29)

(54)

30

36

50

31

4

(8)




Total other medicines

576

(35)

(41)

641

11

13

731

14

14




Total Product Sales

5,465

(5)

(7)

5,718

5

5

6,132

7

8




 

 

10 Sequential quarterly Product Sales - 2018

The table below provides an analysis of sequential quarterly Product Sales, with Actual and CER growth rates reflecting quarter-on-quarter growth.


Q1 2018

Actual

CER

Q2 2018

Actual

CER

Q3 2018

Actual

CER

Q4 2018

Actual

CER


$m

%

%

$m

%

%

$m

%

%

$m

%

%

Oncology













Tagrisso

338

11

10

422

25

25

506

20

23

594

17

19

Iressa

132

2

(1)

143

8

8

131

(8)

(5)

112

(15)

(13)

Lynparza

119

19

18

150

26

26

169

13

15

209

24

25

Imfinzi

62

n/m

n/m

122

98

98

187

53

52

262

40

41

Calquence

8

n/m

n/m

12

51

50

18

50

50

24

33

33

Faslodex

254

7

5

247

(3)

(2)

258

4

7

269

4

5

Zoladex

184

(2)

(4)

192

4

5

194

1

6

182

(6)

(2)

Arimidex

54

(5)

(7)

57

6

6

55

(4)

-

46

(16)

(13)

Casodex

52

(4)

(6)

52

-

(2)

51

(2)

4

46

(10)

(8)

Others

27

(7)

(20)

37

37

50

28

(24)

(22)

23

(18)

13

Total Oncology

1,230

10

8

1,434

17

17

1,597

11

14

1,767

11

13

BioPharmaceuticals: CVRM













Farxiga

299

(10)

(11)

340

14

15

355

4

7

397

12

13

Brilinta

293

(2)

(4)

316

8

9

336

6

9

376

12

13

Onglyza

129

(28)

(29)

126

(2)

(2)

140

11

14

148

6

8

Bydureon

139

(5)

(5)

155

12

11

152

(2)

(1)

138

(9)

(9)

Byetta

31

(35)

(38)

29

(7)

(3)

34

17

17

32

(6)

(6)

Symlin

9

(31)

(31)

7

(22)

(22)

8

14

14

10

25

25

Crestor

389

(35)

(36)

338

(13)

(12)

353

4

8

353

-

2

Seloken/Toprol-XL

200

19

18

173

(14)

(13)

179

3

10

160

(11)

(8)

Atacand

71

(3)

(3)

66

(8)

(8)

65

(2)

5

58

(11)

(9)

Others

85

6

4

73

(13)

(11)

73

(3)

-

75

3

3

BioPharmaceuticals: total CVRM

1,645

(15)

(17)

1,623

(1)

-

1,695

4

8

1,747

3

5

BioPharmaceuticals: Respiratory













Symbicort

634

(16)

(17)

672

6

6

619

(8)