Strong momentum in the year to date leads to increased guidance for Total Revenue ex COVID-19 medicines and Core EPS
AstraZeneca
9 November 2023
9M and Q3 2023 results
Strong momentum in the year to date leads to increased guidance for Total Revenue ex COVID-19 medicines and Core EPS
Revenue and EPS summary
| 9M 2023 | Q3 2023 | ||||||
| % Change | % Change | ||||||
| $m | Actual | CER[1] | $m | Actual | CER | ||
| – Product Sales | 32,466 | 1 | 4 | 11,018 | 4 | 5 | |
| – Alliance Revenue[2] | 1,004 | 99 | 99 | 377 | 76 | 75 | |
| – Collaboration Revenue | 317 | (28) | (28) | 97 | (46) | (47) | |
| Total Revenue | 33,787 | 2 | 5 | 11,492 | 5 | 6 | |
| Total Revenue ex COVID-19 | 33,453 | 12 | 15 | 11,492 | 12 | 13 | |
| Reported[3] EPS[4] | $3.22 | >2x | >2x | $0.89 | (16) | (6) | |
| Core[5] EPS | $5.80 | 10 | 17 | $1.73 | 4 | 9 | |
Financial performance (9M 2023 figures unless otherwise stated, growth numbers at CER)
‒ Total Revenue $33,787m, up 5% despite a decline of $2,896m from COVID-19 medicines[6]
‒ Excluding COVID-19 medicines, both Total Revenue and Product Sales increased 15%
‒ Total Revenue from Oncology medicines increased 20%, CVRM[7] 19%, R&I[8] 9%, and Rare Disease 12%
‒ Core Product Sales Gross Margin[9] of 82%, up two percentage points, reflecting the decline in sales of lower margin COVID‑19 medicines
‒ Core Operating Margin of 35% increased by three percentage points including the previously-announced gain from an update to the contractual relationships for Beyfortus, totalling $712m and recorded in Core Other operating income
‒ Core EPS increased 17% to $5.80
‒ FY 2023 Total Revenue excluding COVID-19 medicines now expected to increase by a low-teens percentage at CER
‒ FY 2023 Core EPS now expected to increase by a low double-digit to low-teens percentage at CER
Pascal Soriot, Chief Executive Officer, AstraZeneca, said:
“Our company continued its strong growth trajectory in the third quarter with Total Revenue from our non‑COVID-19 medicines up 13% compared to last year.
We initiated several Phase III trials of high-potential molecules this quarter, including for volrustomig, our PD‑1/CTLA-4[10] bispecific antibody. Our portfolio of bispecifics has the potential to replace the first-generation checkpoint inhibitors across a range of cancers. We also initiated a fixed dose combination study of zibotentan with Farxiga which has the potential to significantly improve outcomes for patients with kidney disease not well controlled on current standard of care.
I am excited about the acceleration of our cardiometabolic and obesity pipeline with today’s licensing agreement for ECC5004, a potential best-in-class, oral GLP-1RA[11]. This molecule could offer an important advance, as both a monotherapy and in combinations, for the estimated one billion people living with cardiometabolic diseases such as type-2 diabetes and obesity.
Given the momentum in the year to date we have increased our full-year guidance for Total Revenue excluding COVID medicines as well as for Core EPS.”
Key milestones achieved since the prior results announcement
‒ Key positive read-outs: datopotamab deruxtecan in metastatic HR[12]-positive breast cancer (TROPION‑Breast01); Imfinzi in liver cancer (EMERALD-1); Fasenra in EGPA[13] (MANDARA)
‒ Key regulatory approvals: EU approval for Enhertu in HER2[14]-mutant lung cancer (DESTINY‑Lung02); China approvals for Forxiga in heart failure regardless of ejection fraction (DELIVER); Calquence in r/rCLL[15] (ASCEND); Soliris in NMOSD[16]. Japan approvals for Lynparza in prostate cancer (PROpel); Enhertu in HER2-mutant lung cancer (DESTINY-Lung02)
‒ Other milestones: Tagrisso granted US Breakthrough Therapy Designation and US Priority Review in combination with chemotherapy for treatment of patients with locally advanced or metastatic EGFRm[17] NSCLC[18] (FLAURA2); Enhertu granted US Breakthrough Therapy Designations in HER2-positive colorectal
cancer (DESTINY-CRC01, DESTINY-CRC02) and multiple types of HER2‑expressing tumours (DESTINY‑PanTumor02)
Guidance
The Company updates its Total Revenue and Core EPS guidance for FY 2023 at CER, based on the average foreign exchange rates through 2022.
Total Revenue is expected to increase by a mid single-digit percentage
(previously low-to-mid single-digit).
Excluding COVID-19 medicines, Total Revenue is expected to increase by a low-teens percentage
(previously low double-digit).
Core EPS is expected to increase by a low double-digit to low-teens percentage
(previously high single-digit to low double-digit).
Other elements of the Income Statement are expected to be broadly in line with the indications issued in the Company’s H1 2023 results announcement.
The Company is unable to provide guidance on a Reported basis because it cannot reliably forecast material elements of the Reported results, including any fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal settlement provisions. Please refer to the cautionary statements section regarding forward-looking statements at the end of this announcement.
Currency impact
If foreign exchange rates for October to December 2023 were to remain at the average rates seen in September 2023, it is anticipated that FY 2023 Total Revenue would incur a low single-digit adverse impact versus the performance at CER, and Core EPS would incur a mid single-digit adverse impact (previously a low-to-mid single-digit adverse impact).
The Company’s foreign exchange rate sensitivity analysis is provided in Table 19.
Table 1: Key elements of Total Revenue performance in Q3 2023
| % Change |
| Revenue type | $m | Actual | CER | |||
| Product Sales | 11,018 | 4 | 5 | * Double-digit growth at CER in Oncology, CVRM and Rare Disease | ||
| Alliance Revenue | 377 | 76 | 75 | * $266m for Enhertu (Q3 2022: $160m)* $74m for Tezspire (Q3 2022: $26m) | ||
| Collaboration Revenue | 97 | (46) | (47) | * $71m for Beyfortus regulatory milestone | ||
| Total Revenue | 11,492 | 5 | 6 | * Excluding COVID-19 medicines, Q3 2023 Total Revenue increased by 12% (13% at CER) | ||
| Therapy areas | $m | Actual % | CER % | |||
| Oncology | 4,664 | 15 | 17 | * Strong performance across key medicines and regions* No milestones from Lynparza in the quarter (Q3 2022: $75m) | ||
| CVRM | 2,687 | 14 | 16 | * Farxiga up 41%, Lokelma up 30% (31% at CER), roxadustat up 31% (39% CER), Brilinta declined 2% (1% at CER) | ||
| R&I | 1,549 | 3 | 5 | * Fasenra up 10%, Breztri up 66% (69% CER). Saphnelo and Tezspire also continue to grow rapidly during their launch phase, partially offset by a 12% decline (10% at CER) in Symbicort following entry of a generic competitor in the US during the quarter | ||
| V&I[19] | 312 | (64) | (65) | * $nil revenue from COVID-19 mAbs and Vaxzevria in the quarter (Q3 2022: $536m and $180m respectively)* Beyfortus $138m, including $50m of Product Sales from product supplied to Sanofi, $71m of Collaboration Revenue for a regulatory milestone and $17m of Alliance Revenue for AstraZeneca’s share of gross profit outside US | ||
| Rare Disease | 1,974 | 13 | 14 | * Ultomiris up 50% (49% at CER), partially offset by decline in Soliris of 13% (12% at CER)* Strensiq up 20% (21% at CER) and Koselugo up 81% reflecting strong patient demand | ||
| Other Medicines | 306 | (36) | (32) | * Nexium generic competition in Japan | ||
| Total Revenue | 11,492 | 5 | 6 | |||
| Regions inc. COVID-19 | $m | Actual % | CER % | |||
| US | 4,859 | 5 | 4 | |||
| Emerging Markets | 2,964 | 4 | 12 | |||
| – China | 1,452 | (6) | 1 | |||
| – Ex-China Emerging Markets | 1,513 | 15 | 25 | |||
| Europe | 2,392 | 16 | 9 | |||
| Established RoW | 1,276 | (10) | (6) | |||
| Total Revenue inc. COVID-19 | 11,492 | 5 | 6 | · Growth rates impacted by lower sales of COVID‑19 medicines (see table below) | ||
| Regions ex. COVID-19 | $m | Actual % | CER % | |||
| US | 4,859 | 12 | 12 | |||
| Emerging Markets | 2,964 | 8 | 16 | |||
| – China | 1,452 | (6) | 1 | |||
| – Ex-China Emerging Markets | 1,513 | 25 | 36 | |||
| Europe | 2,392 | 23 | 16 | |||
| Established RoW | 1,276 | 5 | 10 | |||
| Total Revenue ex. COVID-19 | 11,492 | 12 | 13 |
Table 2: Key elements of financial performance in Q3 2023
| Metric | Reported | Reported change | Core | Core change | Comments[20] | |
| Total Revenue | $11,492m | 5% Actual 6% CER | $11,492m | 5% Actual 6% CER | * Excluding COVID-19 medicines, Q3 2023 Total Revenue increased by 12% (13% at CER)* See Table 1 and the Total Revenue section of this document for further details | |
| Product Sales Gross Margin | 81% | +9pp Actual +10pp CER | 81% | +1pp Actual +1pp CER | + Favourable mix of sales from Oncology and Rare Disease medicines+ No sales of COVID-19 medicines‒ Increasing mix of products with profit-sharing arrangements, where AstraZeneca books Product Sales and records an expense in COGS[21] for the profit share due to its partner* Variations in Product Sales Gross Margin can be expected between periods due to product seasonality, foreign exchange fluctuations and other effects | |
| R&D expense | $2,584m | 5% Actual 4% CER | $2,485m | 5% Actual 5% CER | + Increased investment in the pipeline* Core R&D-to-Total Revenue ratio of 22% (Q3 2022: 21%)* Year-on-year comparisons can be impacted by differences in cost phasing driven by study starts and execution | |
| SG&A expense | $4,800m | 12% Actual 12% CER | $3,355m | 6% Actual 7% CER | + Market development for recent launches and pre-launch activities+ Reported SG&A impacted by increased charges for legal provisions, including a $425m charge to provisions relating to a legal settlement in Q3 2023 (see Note 6)* Core SG&A-to-Total Revenue ratio of 29% (Q3 2022: 29%)* Year-on-year comparisons can be impacted by differences in cost phasing | |
| Other operating income (and expense)[22] | $70m | -34% Actual -33% CER | $70m | -35% Actual -34% CER | ‒ Discontinuation of brazikumab development | |
| Operating Margin | 17% | +6pp Actual +7pp CER | 31% | Stable at Actual +1pp CER | * See Product Sales Gross Margin, expenses and Other operating income and expense commentary above | |
| Net finance expense | $291m | -9% Actual -6% CER | $223m | -12% Actual -7% CER | + Higher interest received on cash and short-term investments, broadly offset by higher rates on floating debt and bond issuances | |
| Tax rate | 17% | n/m Actual n/m CER | 19% | +1pp Actual +1pp CER | * Variations in the tax rate can be expected between periods | |
| EPS | $0.89 | -16% Actual -6% CER | $1.73 | 4% Actual 9% CER | * Further details of differences between Reported and Core are shown in Table 14 |
Table 3: Pipeline highlights since prior results announcement
| Event | Medicine | Indication / Trial | Event |
| Regulatory approvals and other regulatory actions | Lynparza | mCRPC[23] (1st-line) (PROpel) | Regulatory approval (JP) |
| Enhertu | HER2m[24] NSCLC (2nd-line+) (DESTINY-Lung02) | Positive CHMP Opinion (EU), Regulatory approval (EU, JP) | |
| Calquence | CLL[25] (ASCEND) | Regulatory approval (CN) | |
| Forxiga | HFpEF[26] (DELIVER) | Regulatory approval (CN) | |
| Soliris | NMOSD | Regulatory approval (CN) | |
| Regulatory submissions or acceptances* | Tagrisso | EGFRm NSCLC (1st-line) (FLAURA2) | Regulatory submission (US, EU, CN), Priority Review (US) |
| Imfinzi | NSCLC (neoadjuvant) (AEGEAN) | Regulatory submission (US) | |
| capivasertib | HR+/HER2-negative breast cancer (2nd-line) (CAPItello-291) | Regulatory submission (CN) | |
| roxadustat | Chemotherapy-induced anaemia | Regulatory submission (CN) | |
| FluMist | Self-administered influenza vaccine | Regulatory submission (US) | |
| Major Phase III data readouts and other developments | Imfinzi | Liver cancer (locoregional) (EMERALD-1) | Primary endpoint met |
| datopotamab deruxtecan | HR+/HER2-breast cancer (inoperable and/or metastatic) (TROPION-Breast01) | Primary endpoint met | |
| Fasenra | EGPA (MANDARA) | Primary endpoint met |
*US, EU and China regulatory submission denotes filing acceptance