AstraZeneca warns of hit to sales, profit this year from COVID-19 outbreak
Headline results for the fourth quarter:
$6.3 billion (in line with forecasts)
$6.7 billion (in line with forecasts)
Note: All changes are versus the prior-year period unless otherwise stated
What the company said:
"In the first full year of our return to growth, we made good progress in line with our strategy," remarked CEO Pascal Soriot, adding "results from our new medicines and emerging markets accompanied positive news for patients, most recently including regulatory approvals of Enhertu in breast cancer and Calquence in leukaemia."
With regards questions about who will succeed Soriot as CEO, a role he has held since 2012, the executive said that there is a sub-committee looking at succession planning, although he does not "plan to retire in the next few months."
- Oncology product sales: $2.3 billion, up 29%
- Tagrisso: $884 million, up 49%, boosted by approvals for the first-line treatment of patients with EGFR-mutated non-small-cell lung cancer (NSCLC)
- Imfinzi: $424 million, up 62%, with US sales driven almost entirely by use in unresectable, Stage III NSCLC
- Lynparza: $351 million, up 68%, with the "strong performance" geographically spread amid launches continuing in emerging markets
- Faslodex: $166 million, down 39%, reflecting the launch of multiple generic versions of the drug in the US, where sales plunged 88% to $17 million
- Iressa: $80 million, down 29%, with sales declining in the US and Europe given the growing use of Tagrisso
- Calquence: $56 million, with most sales in the US, where the drug was recently approved the treatment of chronic lymphocytic leukaemia and small lymphocytic lymphoma
- Cardiovascular, renal and metabolic disease product sales: $1.8 billion, up 2%
- Brilinta: $428 million, up 14%, boosted by patient uptake for the treatment of acute coronary syndrome and high-risk post-myocardial infarction
- Farxiga: $419 million, up 6%, reflecting growth in the SGLT-2 class in Europe and emerging markets, while US sales were impacted by changes in formulary access for competitor medicines
- Crestor: $296 million, down 16%, mainly due to generic competition in the US and Europe, as well as the effect of volume-based procurement in China
- Respiratory product sales: $1.5 billion, up 13%
- Symbicort: $712 million, up 12%, partly due to a comparison with one-off unfavourable adjustments in the fourth quarter of 2018
- Pulmicort: $413 million, up 6%, led by higher levels of demand in China
- Fasenra: $206 million, up 65%
- Nexium: $353 million, down 10%, partly reflecting US loss of exclusivity in 2015
- Emerging market sales: $2.1 billion, up 18%, with revenue in China rising 25% to $1.2 billion
- Collaboration revenue: $414 million, down 36%, with milestones related to Lynparza falling 44% to $350 million
- Full-year revenue: $24.4 billion, up 10%
- Full-year profit: $1.5 billion, down 22%
AstraZeneca expects annual revenue to increase by a high single-digit to a low double-digit percentage, while core earnings per share are predicted to grow by a mid- to high-teens percentage. However, the company cautioned that the guidance depends "on the impact of the COVID-19 epidemic," noting that the current forecast "assumes an unfavourable impact in China on total revenue and core [earnings per share] lasting up to a few months."
Ahead of the results, analysts at Credit Suisse suggested that sales growth forecast this year would be in the high-single digits before factoring in any coronavirus impact.
Soriot said on Friday "we want to be actively conservative in our outlook," adding "so far we've had relatively limited disruption to our activities. We'll get past this epidemic and China will remain a very important part of our company."
What analysts said:
"Management guidance will disappoint (although) we would flag that AstraZeneca has attempted to quantify the impact of COVID-19 in its guidance, with other large pharma (e.g. GlaxoSmithKline) excluding this impact," Shore Capital analysts noted.
Meanwhile, Bryan Garnier analyst Eric Le Berrigaud said "new drugs which were growth drivers all through 2019 posted below-expectations fourth-quarter sales." Le Berrigaud also suggested that Tagrisso missed forecasts due to adjustments for rebates and discounts in the US.
AstraZeneca disclosed that it ended early-stage work on the anti-ASCT2 antibody-drug conjugate MEDI7247 in haematological malignancies and solid tumours, as well as the CD73 and A2A inhibitor combination of oleclumab plus AZD4635 in EGFR-mutated NSCLC.