6-K 1 a18-14307_16k.htm 6-K

Table of Contents

 

 

 

FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of July 2018

 

Commission File Number: 001-11960

 

AstraZeneca PLC

 

1 Francis Crick Avenue

Cambridge Biomedical Campus

Cambridge CB2 0AA

United Kingdom

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x

 

Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o

 

No x

 

If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b):   82-   

 

 

 



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AstraZeneca PLC

26 July 2018 07:00 BST

 

H1 2018 Results

 

Strong performances from new medicines and Emerging Markets underpin the return to growth in 2018

 

Over the first half, the strong sales growth from new medicines (+75%, +69% at CER(1)) and the continued strength of the Emerging Markets business (+14%, +10% at CER) were offset by the impact from the loss of Crestor exclusivity in Europe and Japan. In line with expectations, an improved performance is anticipated in the second half, notably Product Sales, where guidance is reiterated for a low single-digit percentage increase over the full year at CER. Important news flow from the pipeline is expected to continue beyond the rest of the year.

 

Financial Highlights

 

 

H1 2018

Q2 2018

 

 

% change

 

% change

 

$m

Actual

CER

$m

Actual

CER

Total Revenue

10,333

(1)

(5)

5,155

2

(1)

Product Sales

10,015

2

(2)

5,030

2

(1)

Externalisation Revenue

318

(53)

(54)

125

14

14

Reported Operating Profit(2)

1,459

(21)

(20)

763

(17)

(20)

Core Operating Profit(3)

2,161

(33)

(34)

1,265

(18)

(22)

Reported Earnings Per Share (EPS)

$0.54

(32)

(34)

$0.27

(27)

(38)

Core EPS

$1.17

(37)

(39)

$0.69

(21)

(26)

 

·                  Product Sales increased by 2% (down by 2% at CER) to $10,015m. New medicines(4) generated more than $1bn in additional sales at CER in the half

 

·                  The Reported Gross Margin declined by three percentage points to 78.6%, reflecting the favourable impact of manufacturing variances realised in H1 2017 and the agreement on Lynparza with MSD(5); the Core Gross Margin fell by three percentage points to 80.0%

 

·                  Productivity gains and cost discipline continued with prioritised and targeted investment in new medicines and additional investment in China

 

·             Total Reported Operating Expenses increased by 3% (down by 1% at CER) to $7,814m. Total Core Operating Expenses increased by 6% (2% at CER) to $6,877m.

·             Reported R&D costs declined by 6% (9% at CER) to $2,641m; Core R&D costs declined by 2% (5% at CER) to $2,558m, driven by efficiency savings. Reported SG&A costs increased by 8% (3% at CER) to $5,008m; Core SG&A costs increased by 11% (7% at CER) to $4,154m

 

·                  Externalisation Revenue declined by 53% (54% at CER) to $318m. Reported Other Operating Income & Expense increased by 29% (28% at CER) to $1,086m; Core Other Operating Income & Expense declined by 27% to $704m, with the difference between the Reported and Core performance reflecting a legal settlement. The Company continues to anticipate a significant level of externalisation activities in H2 2018

 

·                  An unchanged first interim dividend of $0.90 per share

 

·                  Restructuring costs reduced to $187m (H1 2017: $496m). Capital expenditure reduced to $486m (H1 2017: $549m). The Company continues to anticipate declines in restructuring costs and capital expenditure over the full year

 

·                  FY 2018 guidance reiterated and unchanged

 



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

 

“The performance in the first half demonstrated that we remain firmly on track to return our company to Product Sales growth in 2018. Our new medicines performed strongly and have established themselves as major drivers of Product Sales, including Lynparza, Tagrisso and Imfinzi in Oncology, Brilinta and Farxiga in CVRM and Fasenra in Respiratory. Emerging Markets, led by China, delivered double-digit growth.

 

The pipeline also continued to deliver: in Oncology, strong results were achieved by Lynparza in first-line ovarian cancer and Imfinzi showed an overall-survival benefit for patients in earlier-stage lung cancer, while a number of approvals were granted, including for Lokelma in hyperkalaemia. AstraZeneca’s rich pipeline and sharp commercial focus make us confident that we have in place the right conditions for our return to growth this year.”

 

Commercial Highlights

 

New medicines generated more than $1bn in additional sales at CER in the half compared to H1 2017. Product Sales highlights were:

 

·                  Oncology: sales growth of 42% in the half (37% at CER) to $2,664m, including:

 

·             Lynparza sales of $269m, growth of 132% (124% at CER), driven by expanded use in the treatment of ovarian cancer and a new approval for the use in the treatment of breast cancer. A very strong start in Japan, following the medicine’s launch in Q2 2018

·             Tagrisso sales of $760m, growth of 89% (82% at CER) reflecting increased use in the treatment of 2nd-line EGFR(6) T790M-mutated(7) NSCLC(8) and the newly-approved use in the 1st-line EGFR-mutated (EGFRm) setting as a new standard of care (SoC)

·             Imfinzi sales of $184m (Q2 2018: $122m), reflecting ongoing launches for the treatment of unresectable, Stage III NSCLC, where the number of new-patient starts continued to grow

 

·                  New CVRM(9): 12% growth (9% at CER) to $1,874m, including:

 

·             Brilinta sales of $609m, growth of 23% (18% at CER) due to continued market penetration in acute coronary syndrome and high-risk periprocedural myocardial infarction (HR PMI)

·             Farxiga sales of $639m, growth of 40% (36% at CER) as the medicine consolidated its blockbuster status

·             Bydureon sales of $294m, a decline of 2% (3% at CER). An encouraging BCise device launch was reflected in an increase in Q2 2018 sales of 6% (5% at CER) to $155m

 

·                  Respiratory: 6% growth (stable at CER) to $2,407m, including:

 

·             A Symbicort sales decline in the half of 6% (10% at CER) to $1,306m, as competitive class pressures in the US continued. Symbicort, however, delivered a significantly-improved sequential US performance in Q2 2018

·             Pulmicort sales growth of 12% in the half (6% at CER) to $633m. Q2 2018 growth of 27% (20% at CER) to $287m, reflecting the normalisation of supply in China

·             Fasenra sales of $86m (Q2 2018: $65m) further consolidating its leadership position among novel biologic asthma medicines

 

·                  Emerging Markets: the largest region by Product Sales, with growth of 14% (10% at CER) to $3,424m, including:

 

·             A China sales increase of 33% (24% at CER) to $1,893m. Underpinned by the launch of Tagrisso, Oncology sales in China grew by 57% (46% at CER) to $403m

·             An ex-China sales decline of 3% to $1,531m. A robust result, impacted by divested Product Sales and adverse performances in the Middle East, Africa and Russia

 

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Pipeline Highlights

 

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

 

Regulatory Approvals

-                    Lynparza - breast cancer (JP)

-                    Tagrisso - lung cancer (1st line) (EU)

-                    Imfinzi - unresectable, Stage III NSCLC (JP)

-                    Lokelma - hyperkalaemia (US)

Regulatory Submissions and/or Acceptances

-                    Forxiga - type-1 diabetes (JP)

-                    Forxiga combination with Onglyza and metformin - type-2 diabetes (EU)

-                    Bydureon - type-2 diabetes CVOT(10) (US)

Major Phase III Data Readouts or Other Major Developments

-                    Lynparza - ovarian cancer (1st line): primary PFS(11) endpoint met

-                    Imfinzi - unresectable, Stage III NSCLC: primary OS(12) endpoint met

-                    selumetinib - thyroid cancer: did not meet primary endpoint

-                    Bydureon BCise - type-2 diabetes; new device: positive CHMP(13) opinion

-                    Fasenra - COPD(14): did not meet primary endpoints

-                    lanabecestat - Alzheimer’s disease: termination of Phase III programme

 

Guidance

 

Guidance for FY 2018 is reiterated and unchanged. All measures in this section are at CER. Company guidance is on Product Sales and Core EPS only:

 

Product Sales

A low single-digit percentage increase

Core EPS

$3.30 to $3.50

 

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.

 

Additional Commentary

 

Outside of guidance, the Company provides indications for FY 2018 vs. the prior year:

 

·                  The sum of Externalisation Revenue and Other Operating Income & Expense is anticipated to decline vs. the prior year. As part of its long-term growth strategy, the Company remains committed to focusing on appropriate cash-generating and value-accretive externalisation activities that reflect the ongoing productivity of the pipeline. It is also committed to the continued management of its portfolio through divestments and to increasing the focus, over time, on its three main therapy areas

 

·                  Core R&D costs in FY 2018 are anticipated to be in the range of a low single-digit percentage decline to stable. This expectation includes the favourable impact on development costs from the MSD collaboration

 

·                  The Company maintains its focus on reducing operational and infrastructure costs. Total Core SG&A costs are expected to increase by a low to mid single-digit percentage in FY 2018, reflecting targeted support for medicine launches, including Imfinzi in Oncology and Fasenra in Respiratory, as well as additional investment in China. The Company also anticipates declines in restructuring costs and capital expenditure in FY 2018 vs. the prior year

 

·                  A Core Tax Rate of 16-20% (FY 2017: 14%)

 

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Currency Impact

 

Based only on average exchange rates in the six months to 30 June 2018 and the Company’s published currency sensitivities, the Company anticipates a favourable low single-digit percentage impact from currency movements on Product Sales and Core EPS in FY 2018. Details on currency sensitivities are contained within the Operating and Financial Review.

 

Sustainability

 

AstraZeneca is committed to being a valued and trusted partner to its stakeholders over the long term. There is a distinct connection between maintaining a strong business and making a positive impact to a fairer, safer and healthier world. AstraZeneca is dedicated to pushing the boundaries of science to deliver sustainable health that transforms the lives of patients around the world.

 

AstraZeneca’s sustainability ambition is founded on making science accessible and operating in a way that recognises the interconnection between business growth, the needs of society and the limitations of the planet. The Company’s sustainability ambition is reinforced by its purpose and values, which are intrinsic to its business model, and ensures that the delivery of its strategy broadens access to medicines, minimises the environmental footprint of medicines and processes and ensures that all business activities are underpinned by the highest levels of ethics and transparency.

 

A full update on the Company’s year-to-date sustainability progress is shown in the Sustainability Update section of this announcement.

 


Notes

 

The following notes refer to pages 1-3:

 

(1)                       Constant exchange rates. These are non-GAAP financial measures because they remove the effects of currency movements from Reported results.

 

(2)                       Reported financial measures are the financial results presented in accordance with International Financial Reporting Standards.

 

(3)                       Core financial measures. These are non-GAAP financial measures because, unlike Reported performance, they cannot be derived directly from the information in the Group Financial Statements. See the Operating and Financial Review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

 

(4)                       Lynparza, TagrissoImfinzi, Calquence, Brilinta, Farxiga, Lokelma, Bevespi and Fasenra.

 

(5)                       Merck & Co., Inc., Kenilworth, NJ, US, known as MSD outside the US and Canada.

 

(6)                       Epidermal growth factor receptor.

 

(7)                       Substitution of threonine (T) with methionine (M) at position 790 of exon 20 mutation.

 

(8)                       Non-small cell lung cancer.

 

(9)                       New Cardiovascular, Renal and Metabolism, incorporating Brilinta, Diabetes medicines and Lokelma.

 

(10)                  Cardiovascular outcomes trial.

 

(11)                  Progression-free survival.

 

(12)                  Overall survival.

 

(13)                  Committee for Medicinal Products for Human Use, the European Medicines Agency’s (EMA) committee with responsibility for human medicines.

 

(14)      Chronic obstructive pulmonary disease.

 

The performance shown in this announcement covers the six-month period to 30 June 2018 (the half or H1 2018) and the three-month period to 30 June 2018 (the second quarter or Q2 2018) compared to the six-month period to 30 June 2017 (H1 2017) and the three-month period to 30 June 2017 (Q2 2017) respectively, unless stated otherwise. All commentary in the Operating and Financial Review relates to the half, unless stated otherwise.

 

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Pipeline - Forthcoming 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 results from the pipeline.

 

H2 2018

Lynparza - ovarian cancer (1st line): regulatory submission(15)

Tagrisso - lung cancer (1st line): regulatory decision (JP)

 

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

Imfinzi +/- treme - lung cancer (1st line) (MYSTIC): data readout (final OS), regulatory submission

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

Imfinzi +/- treme - head & neck cancer (2nd line): data readout

 

moxetumomab pasudotox - hairy cell leukaemia (3rd line): regulatory decision (US)

 

Farxiga - type-2 diabetes CVOT: data readout

Bydureon autoinjector - type-2 diabetes: regulatory decision (EU)

roxadustat - anaemia: data readout

 

Duaklir - COPD: regulatory submission acceptance (US)

Bevespi - COPD: regulatory decision (EU); regulatory submission (JP)

PT010 - COPD: regulatory submission

 

anifrolumab - lupus: data readout

H1 2019

Lynparza - breast cancer: regulatory decision (EU)

Lynparza - pancreatic cancer: data readout

selumetinib - NF-1: regulatory submission

 

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

Imfinzi +/- treme - head & neck cancer (2nd line): regulatory submission

Imfinzi + treme - lung cancer (NEPTUNE): data readout

 

Brilinta - CAD(16) / type-2 diabetes CVOT: data readout

Farxiga - type-2 diabetes CVOT: regulatory submission

Lokelma - hyperkalaemia: regulatory submission (JP)

roxadustat - anaemia: regulatory submission (US)

 

anifrolumab - lupus: regulatory submission

H2 2019

Lynparza - pancreatic cancer: regulatory submission

Lynparza - ovarian cancer (1st line) (PAOLA-1): data readout

Tagrisso - lung cancer (1st line): data readout (final OS)

 

Imfinzi + treme - lung cancer (NEPTUNE): regulatory submission

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

Imfinzi +/- treme - small-cell lung cancer: data readout, regulatory submission

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

 

Calquence - CLL(17): data readout, regulatory submission

 

Brilinta - CAD(18) / type-2 diabetes CVOT: regulatory submission

Farxiga - type-1 diabetes: regulatory decision (EU, JP)

 


(15)  Regarding ‘regulatory submission’, the Company will generally communicate based on regulatory submission acceptance in the US and the EU and regulatory submission in Japan.

(16)  Coronary artery disease.

(17)  Chronic lymphocytic leukaemia.

(18)  Coronary artery disease.

 

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Conference Call

 

A live presentation, conference call and webcast for investors and analysts, hosted by management, will begin at 12:30pm UK time today. Details can be accessed via astrazeneca.com.

 

Reporting Calendar

 

The Company intends to publish its year-to-date and third-quarter financial results on 8 November 2018.

 

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 us on Twitter @AstraZeneca.

 

Investor Relations

 

 

 

 

 

Thomas Kudsk Larsen

 

+44 203 749 5712

Josie Afolabi

 

+44 203 749 5631

Craig Marks

Finance; Fixed Income; M&A

+44 7881 615 764

Henry Wheeler

Oncology

+44 203 749 5797

Mitchell Chan

Oncology; Other

+1 240 477 3771

Christer Gruvris

Brilinta; Diabetes

+44 203 749 5711

Nick Stone

Respiratory; Renal

+44 203 749 5716

Jennifer Kretzmann

Retail Investors

+44 203 749 5824

US toll free

 

+1 866 381 7277

 

Media Relations

 

 

 

 

 

Gonzalo Viña

UK/Global

+44 203 749 5916

Karen Birmingham

UK/Global

+44 203 749 5634

Rob Skelding

UK/Global

+44 203 749 5821

Matt Kent

UK/Global

+44 203 749 5906

Jacob Lund

Sweden

+46 8 553 260 20

Michele Meixell

US

+1 302 885 2677

 

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Table Of Contents And List Of Tables

 

 

Page

 

 

Operating And Financial Review

8

Product Sales

12

Product Sales Summary

13

Regional Product Sales

18

Financial Performance

20

Corporate And Business Development Update

28

Sustainability Update

29

Research And Development Update

32

Condensed Consolidated Statement Of Financial Position

45

Condensed Consolidated Statement Of Cash Flows

47

Responsibility Statement of the Directors in Respect of the Half-Yearly Financial Report

48

Independent Review Report to AstraZeneca PLC

49

Notes To The Interim Financial Statements

51

Shareholder Information

64

Cautionary Statements Regarding Forward-Looking Statements

65

 

 

Table 1: Total Revenue

9

Table 2: Product Sales

9

Table 3: Breakdown Of Externalisation Revenue

9

Table 4: Initial Externalisation Revenue

10

Table 5: Ongoing Externalisation Revenue

10

Table 6: Externalised And Divested Medicines

10

Table 7: Ongoing Externalisation Revenue Agreements

11

Table 8: Therapy Area And Medicine Performance

12

Table 9: Regional Product Sales

18

Table 10: H1 2018 Reported Profit And Loss

20

Table 11: Q2 2018 Reported Profit And Loss

21

Table 12: Reconciliation Of Reported Profit Before Tax To EBITDA

22

Table 13: H1 2018 Reconciliation Of Reported To Core Financial Measures

22

Table 14: Q2 2018 Reconciliation Of Reported To Core Financial Measures

23

Table 15: Cash Flow

25

Table 16: Debt And Capital Structure

26

Table 17: Currency Sensitivities

26

Table 18: Environmental Protection Targets

30

Table 19: Update From The Late-Stage Pipeline

32

Table 20: Lynparza Study 08 in prostate cancer; rPFS by HRR status

33

Table 21: Key Lynparza Combination Trials

34

Table 22: Ongoing Key IO Lung Cancer Late-Stage Trials

36

Table 23: Key IO Non-Lung Cancer Late-Stage Trials

37

Table 24: Major Ongoing Cardiovascular Outcomes Trials

39

 

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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). The performance shown in this announcement covers the six-month period to 30 June 2018 (the half or H1 2018) and the three-month period to 30 June 2018 (the second quarter or Q2 2018) compared to the six-month period to 30 June 2017 (H1 2017) and the three-month period to 30 June 2017 (Q2 2017) respectively, unless stated otherwise. All commentary in the Operating and Financial Review relates to the half, unless stated otherwise.

 

Core financial measures, EBITDA, Net Debt, Initial Externalisation Revenue and Ongoing Externalisation Revenue are non-GAAP financial measures because they cannot be derived directly from the Group 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 better understand 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 global restructuring programmes, which includes charges that relate to the impact of global 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, legal settlements and foreign-exchange gains and losses on certain non-structural intra-group loans

 

Details on the nature of Core financial measures are provided on page 68 of the Annual Report and Form 20-F Information 2017. 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 net of cash and cash equivalents, other investments and net derivative financial instruments. Reference should be made to the Reconciliation of Interest-Bearing Loans and Borrowings to Net Debt included in the Cash Flow and Balance Sheet section of this announcement.

 

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

 

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Table 1: Total Revenue

 

 

H1 2018

Q2 2018

 

 

% change

 

% change

 

$m

Actual

CER

$m

Actual

CER

Total Revenue

10,333

(1)

(5)

5,155

2

(1)

Product Sales

10,015

2

(2)

5,030

2

(1)

Externalisation Revenue

318

(53)

(54)

125

14

14

 

Table 2: Product Sales

 

 

 

H1 2018

Q2 2018

 

 

 

% of

% change

 

% of

% change

 

 

$m

total(19)

Actual

CER

$m

total

Actual

CER

Oncology

 

2,664

27

42

37

1,434

29

44

40

New CVRM

 

1,874

19

12

9

974

19

12

9

Respiratory

 

2,407

24

6

1,226

24

12

7

Other

 

3,070

31

(22)

(25)

1,396

28

(29)

(32)

Total

 

10,015

100

2

(2)

5,030

100

2

(1)

 

Table 3: Breakdown Of Externalisation Revenue

 

Ongoing Externalisation Revenue of $216m represented 68% of total Externalisation Revenue in the half (H1 2017: $228m, 34%). The Company anticipates that Ongoing Externalisation Revenue will grow as a proportion of Externalisation Revenue over time. A breakdown of Externalisation Revenue is shown below:

 

 

 

H1 2018

Q2 2018

 

 

 

% of
total
(20)

% change

$m

% of

% change

 

 

$m

Actual

CER

total

Actual

CER

Royalties

 

21

7

(75)

(76)

13

10

(66)

(66)

Milestones/Other(21)

 

195

61

36

37

112

90

n/m

n/m

Ongoing Externalisation Revenue

 

216

68

(5)

(4)

125

100

n/m

n/m

Initial Externalisation Revenue

 

102

32

(77)

(79)

n/m

n/m

Total Externalisation Revenue

 

318

100

(53)

(54)

125

100

14

14

 


(19)  Due to rounding, the sum of therapy area percentages may not agree to the total.

(20)  Due to rounding, the sum of category percentages may not agree to totals.

(21)  May include, inter alia, option income and profit-sharing income.

 

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Table 4: Initial Externalisation Revenue

 

A breakdown of Initial Externalisation Revenue in the half is shown below:

 

Medicine

Partner

Region

$m

Crestor

 

Almirall, S.A.

 

Spain

 

61

Other

 

 

 

 

 

41

Total

 

 

 

 

 

102

 

Table 5: Ongoing Externalisation Revenue

 

A breakdown of Ongoing Externalisation Revenue in the half is shown below:

 

Medicine

Partner

Region

$m

Lynparza

 

MSD - milestone revenue (regulatory milestone)

 

Global

 

70

Lynparza

 

MSD - milestone revenue (sales-related milestone)

 

Global

 

100

Other

 

 

 

 

 

46

Total

 

 

 

 

 

216

 

Table 6: Externalised And Divested Medicines

 

Several AstraZeneca medicines were externalised or divested after H1 2017, thus adversely impacting the Product Sales performance:

 

Completion

Medicine

Region

H1 2018(22)

H1 2017

Difference

Adverse
Impact on

 

 

 

 

 

 

 

 

 

 

 

 

H1 2018

 

 

 

 

 

 

 

 

 

 

 

 

Product Sales

 

 

 

 

 

 

$m

$m

$m

 

October 2017

 

Anaesthetics

 

Global

 

32

159

(127)

 

January 2018

 

Crestor

 

Spain

 

4

44

(40)

 

 

 

Total

 

 

 

36

203

(167)

2%

 


(22)  H1 2018 Product Sales here comprise sales made to partners under manufacturing and supply agreements.

 

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Table 7: Ongoing Externalisation Revenue Agreements

 

Examples of transactions that include Ongoing Externalisation Revenue are shown below:

 

Completion

 

Medicine

 

Partner

 

Region

 

Externalisation Revenue

July 2017

 

Lynparza

 

MSD

 

Global

 

·                  Initial $1.0bn revenue

 

·                  Up to $0.75bn for certain licence options, including $0.25bn paid in Q4 2017

 

·                  Up to $6.15bn in regulatory and sales milestones

March 2017

 

MEDI8897

 

Sanofi Pasteur, Inc.

 

Global

 

·                  Initial €120m revenue

 

·                  Up to €495m in sales and development-related milestones

March 2017

 

Zoladex

 

TerSera Therapeutics LLC (TerSera)

 

US and Canada

 

·                  Initial $250m revenue

 

·                  Up to $70m in sales-related milestones

 

·                  Mid-teen percentage royalties on sales

 

11



Table of Contents

 

Product Sales

 

The performance of new and legacy medicines is shown below, with a geographical split shown in Notes 6 & 7.

 

Table 8: Therapy Area And Medicine Performance

 

 

 

H1 2018

Q2 2018

 

 

 

% of

% change

 

% of

% change

Therapy Area

Medicine

$m

total(23)

Actual

CER

$m

total

Actual

CER

Oncology

Tagrisso

760

8

89

82

422

8

82

77

Iressa

275

3

5

(1)

143

3

4

(1)

Lynparza

269

3

n/m

n/m

150

3

n/m

n/m

Imfinzi

184

2

n/m

n/m

122

2

n/m

n/m

Calquence

20

n/m

n/m

12

n/m

n/m

LEGACY:

 

 

 

 

 

 

 

 

Faslodex

501

5

8

5

247

5

(3)

Zoladex

376

4

4

(1)

192

4

8

4

Arimidex

111

1

5

57

1

6

2

Casodex

104

1

(5)

(11)

52

1

(4)

(9)

Others

64

1

14

11

37

1

23

23

Total Oncology

2,664

27

42

37

1,434

29

44

40

CVRM

Brilinta

609

6

23

18

316

6

16

13

Farxiga

639

6

40

36

340

7

36

34

Onglyza

255

3

(16)

(19)

126

3

(16)

(18)

Bydureon

294

3

(2)

(3)

155

3

6

5

Byetta

60

1

(33)

(35)

29

1

(33)

(35)

Symlin

16

(36)

(36)

7

(36)

(36)

LEGACY:

 

 

 

 

 

 

 

 

Crestor

727

7

(39)

(42)

338

7

(40)

(42)

Seloken/Toprol-XL

373

4

2

(2)

173

3

(4)

(7)

Atacand

137

1

(7)

(10)

66

1

(8)

(10)

Others

158

2

(12)

(17)

73

1

(19)

(23)

Total CVRM

3,268

33

(8)

(11)

1,623

32

(9)

(11)

Respiratory

Symbicort

1,306

13

(6)

(10)

672

13

(5)

(8)

Pulmicort

633

6

12

6

287

6

27

20

Fasenra

86

1

n/m

n/m

65

1

n/m

n/m

Daliresp/Daxas

83

1

(10)

(12)

45

1

(6)

(8)

Tudorza/Eklira

73

1

3

(3)

39

1

15

12

Duaklir

50

43

29

22

38

31

Bevespi

13

n/m

n/m

8

n/m

n/m

Others

163

2

23

15

88

2

35

28

Total Respiratory

2,407

24

6

1,226

24

12

7

 


(23)  Due to rounding, the sum of individual medicine percentages may not agree to totals.

 

12



Table of Contents

 

 

 

H1 2018

Q2 2018

 

 

 

% of

% change

 

% of

% change

Therapy Area

Medicine

$m

total(23)

Actual

CER

$m

total

Actual

CER

Other

Nexium

890

9

(16)

(19)

442

9

(26)

(28)

Synagis

250

2

(17)

(17)

26

1

(63)

(63)

Losec/Prilosec

145

1

7

(1)

76

2

12

4

Seroquel XR

129

1

(20)

(23)

76

2

(20)

(21)

Movantik/Moventig

52

1

(16)

(16)

24

(25)

(25)

Others

210

2

(41)

(44)

103

2

(52)

(53)

Total Other

1,676

17

(19)

(22)

747

15

(30)

(33)

 

Total Product Sales

10,015

100

2

(2)

5,030

100

2

(1)

 

Specialty-care medicines comprise all Oncology medicines and Fasenra. At 27% of total Product Sales, specialty-care-medicine sales grew by 46% in the half (41% at CER) to $2,750m. In H1 2017, speciality-care medicines comprised 19% of total Product Sales.

 

Product Sales Summary

 

ONCOLOGY

 

Product Sales of $2,664m; an increase of 42% (37% at CER). Oncology Product Sales represented 27% of total Product Sales, up from 19% in H1 2017.

 

Lynparza

 

By the end of the half, Lynparza was approved in over 50 countries for the treatment of ovarian cancer. Launches in breast cancer took place in the US and Japan during the period and the indication was under regulatory review in Europe. Product Sales of Lynparza amounted to $269m, an increase of 132% (124% at CER). The strong performance was geographically spread; it was, however, particularly noticeable in the US.

 

US sales grew by 198% to $149m, with continued sequential quarter on quarter growth of 26% to $83m in Q2 2018; the performance in the half reflected continued growth in both the ovarian and breast indications, as well as the H2 2017 launch of Lynparza tablets and regulatory approval as a 2nd-line treatment for ovarian cancer, regardless of BRCA(24) status. In the half, the Company announced the approval of Lynparza in the US as a treatment for patients with germline BRCA-mutated (BRCAm) breast cancer. At the end of the half, Lynparza remained the leading medicine in the poly ADP ribose polymerase (PARP)-inhibitor class in the US, as measured by total prescription volumes.

 

Sales in Europe increased by 50% (36% at CER) to $87m, this was driven by encouraging levels of reimbursement, a number of successful launches, higher BRCA-testing rates and an increased level of penetration across all countries. On 8 May 2018, the Company announced that the EMA had approved Lynparza tablets (300mg twice daily) as a 2nd-line treatment for patients with ovarian cancer, regardless of BRCA status.

 

Japan sales of $10m in the half followed the initial launch in April 2018 in ovarian cancer; Lynparza was approved as a treatment for BRCAm, metastatic breast cancer on 2 July 2018, a targeted chemotherapy-sparing option.

 

In July 2017, AstraZeneca and MSD announced a global strategic oncology collaboration to co-develop Lynparza and the potential medicine selumetinib for multiple cancer types as monotherapies and in combinations. The integration of development and commercial activities is progressing well, with both companies promoting Lynparza.

 


(24)  A BRCA mutation is a mutation in either of the BRCA1 and BRCA2 genes, which are tumour-suppressor genes.

 

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Table of Contents

 

Lung Cancer

 

Tagrisso

 

By the end of the half, Tagrisso was approved in a number of markets, including Brazil, the US, the EU, Russia, Australia, Canada and Egypt, for the treatment of 1st-line EGFRm NSCLC; a number of additional regulatory reviews were also underway. In the 2nd-line setting, Tagrisso has now been approved and launched in more than 75 countries, including in the US, Europe, Japan and China, for patients with EGFR T790M-mutated NSCLC.

 

Product Sales of $760m represented growth of 89% (82% at CER), partly driven by increased testing rates and the aforementioned US approval in the 1st-line setting. Continued growth was also delivered in the 2nd-line indication in other countries.

 

Sales in the US grew by 89% to $341m, with sequential growth in the second quarter of 32% to $194m, reflecting a rapid uptake in the 1st-line setting that followed the April 2018 approval of Tagrisso as a 1st-line treatment of patients with metastatic EGFRm NSCLC. Tagrisso achieved market leadership in new patient starts for the 1st-line treatment of patients with EGFRm NSCLC in the US.

 

Within Emerging Markets, Tagrisso sales grew by 298% (280% at CER) to $159m, with notable growth in China where the medicine was approved in March 2017 as a 2nd-line treatment for patients with EGFR T790M-mutated NSCLC. Asia-Pacific has a relatively high prevalence of patients with an EGFR mutation at 30-40% compared to 10-15% in western markets.

 

In Europe, sales of $139m represented growth of 83% (63% at CER), driven by positive reimbursement decisions, further growth in testing rates and strong levels of demand. Sequentially, sales were stable as increased volumes were offset by adjustments to access agreements, some with retrospective effect, as the medicine reached more patients in each country. Following EU regulatory approval on 8 June 2018 for the initial treatment of patients with EGFRm NSCLC, Tagrisso launched in select EU countries, including in France and Germany and reimbursement negotiations are underway elsewhere.

 

Sales of Tagrisso in Japan increased by 15% (11% at CER) to $118m (Q2 2018: $69m), reflecting focused activities to maximise testing and utilisation rates in the 2nd-line indication. A regulatory decision on Tagrisso as a 1st-line treatment for EGFRm NSCLC is expected in Japan in the second half of the year.

 

Imfinzi

 

Imfinzi is currently approved for the treatment of patients with unresectable, Stage III NSCLC whose disease has not progressed following concurrent platinum-based chemotherapy and radiation therapy (CRT) and for the 2nd-line treatment of patients with locally-advanced or metastatic urothelial carcinoma (bladder cancer).

 

In unresectable, Stage III NSCLC, Imfinzi is approved in the US, Japan, Canada, Switzerland, India and Brazil. Other regulatory reviews are ongoing, and an EU regulatory decision is anticipated in the second half of the year.

 

Global Product Sales amounted to $184m (Q2 2018: $122m) with unresectable, Stage III NSCLC representing the majority of Imfinzi sales. The US represented the vast majority of the global sales; with $5m in sales recorded in other markets following approvals and launches. The number of new and continuing US patient infusions in the unresectable, Stage III NSCLC indication remained strong; additional regulatory approvals are anticipated in H2 2018.

 

Iressa

 

Product Sales of $275m; an increase of 5% (down by 1% at CER). Emerging Markets sales increased by 15% (8% at CER) to $148m. China sales increased by 27% (17% at CER) to $95m; Iressa was included on the National Reimbursement Drug List (NRDL) in 2017. Sales in the US declined by 18% to $14m and increased in Europe by 13% (2% at CER) to $61m.

 

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Table of Contents

 

Other Oncology Medicines

 

Calquence

 

Product Sales of $20m; Calquence was approved and launched in the US on 31 October 2017. The medicine delivered a promising performance in the half, with demand predominantly based on the use in relapsed/refractory (R/R) mantle cell lymphoma (MCL).

 

Legacy: Faslodex

 

Product Sales of $501m; an increase of 8% (5% at CER) that reflected volume growth.

 

Emerging Markets sales grew by 31% (30% at CER) to $71m. China sales grew by 100% (82% at CER) to $22m. US sales increased by 7% to $259m, mainly reflecting a continued strong uptake of the combination with the CDK4/6 class, a medicine approved for the treatment of hormone-receptor-positive breast cancer.

 

Europe sales declined by 11% (21% at CER) to $118m, reflecting the impact of generic entrants in certain countries. In June 2017, a label extension, based upon the FALCON trial in the 1st-line setting was approved in Japan, where sales grew by 56% (50% at CER) to $50m, despite the impact of the biennial price cut implemented on 1 April 2018.

 

Legacy: Zoladex

 

Product Sales of $376m; an increase of 4% (down by 1% at CER).

 

Emerging Markets sales increased by 20% (17% at CER) to $202m. Sales in Europe increased by 1% (down by 9% at CER) to $68m. In the Established Rest Of World (ROW) region, sales declined by 10% (13% at CER) to $103m, driven by the effects of increased competition. On 31 March 2017, the Company completed an agreement with TerSera for the sale of the commercial rights to Zoladex in the US and Canada.

 

CVRM

 

New CVRM sales grew by 12% (9% at CER) to $1,874m, reflecting strong performances from Brilinta and Farxiga, after each attained blockbuster-sales status in FY 2017. Total CVRM sales, which includes Crestor and other legacy medicines, declined by 8% (11% at CER) to $3,268m, comprising 33% of total Product Sales.

 

Brilinta

 

Product Sales of $609m; an increase of 23% (18% at CER).

 

Emerging Markets sales of Brilinta grew by 22% (17% at CER) to $148m, partly reflecting the benefits of inclusion on the NRDL in China in 2017.

 

US sales of Brilinta, at $259m, represented an increase of 20%. The performance, reflecting volume growth, was driven primarily by an increase in the number of patients initiated on Brilinta in the hospital and an increase in volume of 90-day prescriptions. Furthermore, Brilinta continued to deliver increasing levels of market share in the half. US sales growth in Q2 2018 slowed to 13%, with sales of $144m reflecting the impact of affordability programmes.

 

Sales of Brilique in Europe increased by 27% (14% at CER) to $172m, reflecting indication leadership across a number of markets; sales were also bolstered by the inclusion within HR PMI guidelines by the European Society of Cardiology in 2017. Improvements were delivered across the major markets; Brilique gained further reimbursement in key countries in its HR PMI indication with the 60mg dose.

 

Farxiga

 

Product Sales of $639m; an increase of 40% (36% at CER). Farxiga consolidated its global leadership position within the sodium-glucose co-transporter 2 (SGLT2) inhibitor class.

 

Emerging Markets sales increased by 57% (59% at CER) to $157m, reflecting ongoing launches and improved levels of patient access. In March 2017, Forxiga became the first SGLT2-inhibitor medicine to be approved in China, with encouraging levels of access and performance.

 

US sales increased by 29% to $266m. The performance in H1 2017 was adversely impacted by the Company’s level of participation in affordability programmes; subsequent changes to the Company’s approach to these

 

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Table of Contents

 

programmes, however, helped to deliver a much-improved performance in H1 2018. Despite slowing growth in the US, the SGLT2 class continued to be scientifically underpinned by growing evidence around cardiovascular benefits, including data from the CVD-REAL series of studies (first published in May 2017), showing a statistically significant reduced rate of hospitalisation for heart failure and death from any cause compared to other type-2 diabetes medicines.

 

Sales in Europe increased by 45% (28% at CER) to $152m. In Japan, sales grew by 40% (35% to CER) to $28m. Ono Pharmaceutical Co., Ltd is a partner and records in-market sales.

 

Onglyza

 

Product Sales of $255m, a decline of 16% (19% at CER). The performance reflected adverse pressures on the dipeptidyl peptidase-4 (DPP-4) class and an acceleration of ongoing diabetes-market dynamics, where patients are moving to medicines and classes of medicines with documented CV benefits. Given the significant future potential of Farxiga, the Company continues to prioritise commercial support for Farxiga.

 

Sales in Emerging Markets increased by 29% (24% at CER) to $81m. After the addition onto the NRDL in China in 2017, sales grew there by 136% (121% at CER) to $33m, driving the Emerging Market sales growth. Sales in Europe declined by 10% (17% at CER) to $47m, reflecting the broader trend of a shift away from the DPP-4 class.

 

Bydureon

 

Product Sales of $294m; a decline of 2% (3% at CER). An encouraging BCise device launch in the US was reflected in an increase in Q2 2018 sales of 6% (5% at CER) to $155m.

 

Sales in the US declined by 4% to $234m, reflecting pricing headwinds that offset an encouraging performance from the aforementioned BCise launch. Favourable sales volumes were driven by continued growth in the glucagon-like peptide-1 class, at the expense of insulin, for more-advanced forms of type-2 diabetes. Bydureon sales in Europe increased by 2% (down by 10% at CER) to $43m; a regulatory decision on the device in the EU, however, is anticipated in the second half of the year.

 

Legacy: Crestor

 

Product Sales of $727m; a decline of 39% (42% at CER).

 

Sales in China grew by 33% (23% at CER) to $238m, a result of underlying demand. Market growth in statin usage, AstraZeneca’s commercial strength in China and the Company’s successful strategy of broader coverage in China also continued to favourably impact sales.

 

US sales declined by 41% to $90m, reflecting the ongoing impact of multiple Crestor generic medicines. In Europe, sales declined by 69% (72% at CER) to $111m, reflecting the impact of the entry of generic Crestor medicines in various countries in 2017. AstraZeneca expects these impacts to begin to recede in the second half of 2018.

 

In Japan, where Shionogi Co. Ltd is a partner, sales declined by 71% (72% at CER) to $76m, reflecting the impact of the entry of multiple Crestor competitors in the market in the second half of 2017. AstraZeneca expects this impact to recede in the second half of 2018. The decline also reflected actions by the Japanese government to focus further on incentives to increase the adoption of generic medicines.

 

RESPIRATORY

 

Product Sales of $2,407m; increased by 6% (stable at CER) in the half, following a challenging performance in the first quarter. Respiratory Product Sales represented 24% of total Product Sales, a one percentage point increase vs. H1 2017.

 

Symbicort

 

Product Sales of $1,306m; a decline of 6% (10% 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 grew by 13% (10% at CER) to $241m, partly reflecting growth in China of 34% (24% at CER) to $119m. In contrast, US sales declined by 21% to $439m, reflecting continued pricing pressure and the timing of government buying, partly mitigated by market-share gains. The performance was in line with expectations, with challenging pricing pressure expected to continue.

 

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Table of Contents

 

In Europe, sales increased by 3% (down by 8% at CER) to $411m; the performance reflected the level of competition from other branded and Symbicort-analogue medicines. Symbicort, however, continued to retain its class-leadership position and stabilise its volume market share in the class, with some markets achieving volume growth. In Japan, where Astellas Pharma Co. Ltd assists as a promotional partner, sales were stable (down by 3% at CER) to $100m, despite the impact of the biennial price cut implemented on 1 April 2018.

 

Pulmicort

 

Product Sales of $633m; an increase of 12% (6% at CER).

 

Emerging Markets represented 76% of global sales and increased by 22% (15% at CER) to $482m. In China, sales grew by 25% (16% at CER) to $401m, despite a temporary supply constraint in the first quarter. The growth in the half reflected higher demand, strong underlying volume growth and AstraZeneca’s delivery of over 15,000 nebulisation centres in China.

 

Sales in the US and Europe declined by 24% to $59m and increased by 4% (down by 6% at CER) to $50m, respectively, a consequence of the medicine’s legacy status there.

 

Fasenra

 

Product Sales of $86m (Q2 2018: $65m).

 

In November 2017, the Company was granted approval for Fasenra in the US as a treatment for patients with severe, eosinophilic asthma; the approval was followed immediately by the launch of the medicine. US sales amounted to $67m. New-to-brand prescription data showed that Fasenra, a novel biologic medicine, tracked ahead of prior biologic-medicine launches in its class in asthma, despite being third to market. Initial feedback from physicians and patients has been particularly encouraging, citing a rapid onset of action and convenience of dosing.

 

In Europe and Japan, AstraZeneca was granted regulatory approval in January 2018 on a similar basis to that in the US. In Europe, a number of launches were executed in the half, including in Germany, Denmark and Sweden.

 

Sales in Japan amounted to $11m in the half, following its launch in the second quarter.

 

Daliresp/Daxas

 

Product Sales of $83m; a decline of 10% (12% at CER). US sales, representing 81% of global sales, declined by 15% to $67m, driven by a reduced level of adoption of the medicine. It is the only oral, selective, long-acting inhibitor of phosphodiesterase-4, an inflammatory enzyme associated with COPD. Sales in Europe increased by 56% (44% at CER) to $14m.

 

Tudorza/Eklira

 

Product Sales of $73m; an increase of 3% (down by 3% at CER).

 

Sales in the US were stable at $29m. On 17 March 2017, AstraZeneca announced that it had entered a strategic collaboration with Circassia Pharmaceuticals plc (Circassia) for the development and commercialisation of Tudorza in the US. Circassia began its promotion of Tudorza in the US in May 2017, where AstraZeneca books Product Sales.

 

Sales in Europe were stable (down by 11% at CER) to $38m, impacted by the decline of the overall long-acting muscarinic antagonist (LAMA) monotherapy class.

 

Duaklir

 

Product Sales of $50m; an increase of 43% (29% at CER). Duaklir, the Company’s first inhaled dual bronchodilator medicine, is now available for patients in over 25 countries, with almost all sales emanating from Europe. The global LAMA/LABA class continued to grow, albeit below expectations.

 

Bevespi

 

Product Sales of $13m; launched in the US in Q1 2017. Prescriptions in the period tracked in line with other LAMA/LABA launches. The overall class in the US, however, continued to grow more slowly than previously anticipated. Bevespi was the first medicine launched using the Company’s proprietary co-suspension technology.

 

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Table of Contents

 

OTHER

 

Product Sales of $1,676m; a decline of 19% (22% at CER). Other Product Sales represented 17% of total Product Sales, down from 21% in H1 2017.

 

Nexium

 

Product Sales of $890m; a decline of 16% (19% at CER). Emerging Markets sales were stable (down by 3% at CER) to $343m. Sales in the US declined by 45% to $187m in the half. Sales in Europe increased by 2% (down by 9% at CER) at $122m. In Japan, where Daiichi Sankyo Company, Limited is a partner, sales declined by 2% (6% at CER) to $205m, reflecting the biennial price cut implemented on 1 April 2018.

 

Synagis

 

Product Sales of $250m; a decline of 17%. US sales declined by 25% to $125m and continued to be impacted by the prevailing guidelines from the American Academy of Pediatrics Committee on Infectious Diseases. Product Sales to AbbVie Inc., responsible for the commercialisation of Synagis in over 80 countries outside the US, declined by 6% to $125m.

 

Seroquel XR

 

Product Sales of $129m; a decline of 20% (23% at CER). Sales of Seroquel XR in the US, where several competitors launched generic Seroquel XR medicines from November 2016, declined by 36% to $49m. Sales of Seroquel XR in Europe declined by 23% (30% at CER) to $33m, also reflecting the impact of generic-medicine competition. On 8 May 2018, the Company announced that it had entered into an agreement with Luye Pharma Group, Ltd. (Luye Pharma) for the sale and licence of the rights to Seroquel and Seroquel XR in the UK, China and other markets.

 

Regional Product Sales

 

Table 9: Regional Product Sales

 

 

H1 2018

Q2 2018

 

 

% of

% change

 

% of

% change

 

$m

total(25)

Actual

CER

$m

total

Actual

CER

Emerging Markets(26)

3,424

34

14

10

1,659

33

15

12

China

1,893

19

33

24

868

17

37

26

Ex. China

1,531

15

(3)

(3)

791

16

(2)

 

 

 

 

 

 

 

 

 

US

3,102

31

3

3

1,615

32

6

6

 

 

 

 

 

 

 

 

 

Europe

2,154

22

(5)

(14)

1,033

21

(10)

(17)

 

 

 

 

 

 

 

 

 

Established ROW

1,335

13

(11)

(14)

723

14

(13)

(15)

Japan

917

9

(14)

(17)

518

10

(16)

(18)

Canada

244

2

3

(2)

118

2

4

Other Established ROW

174

2

(8)

(11)

87

2

(10)

(11)

 

 

 

 

 

 

 

 

 

Total

10,015

100

2

(2)

5,030

100

2

(1)

 

Emerging Markets

 

Product Sales of $3,424m; an increase of 14% (10% at CER). Q2 2018 sales of $1,659m represented an increase of 15% (12% at CER).

 


(25)  Due to rounding, the sum of region or country percentages may not agree to totals.

(26)  Emerging Markets comprises all remaining Rest of World markets, including Brazil, China, India, Mexico, Russia and Turkey.

 

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Table of Contents

 

China sales grew by 33% (24% at CER) to $1,893m in the half, comprising 55% of total Emerging Markets sales. In Q2 2018, China sales increased by 37% (26% at CER) to $868m. Onglyza and Iressa were included on the NRDL in China in 2017, as were Brilinta, Faslodex and Seroquel XR; the benefits of these inclusions were felt in the half. The performance of new medicines was also encouraging, with Tagrisso as the main contributor.

 

Emerging Markets sales excluding China, however, declined by 3% to $1,531m, partly driven by the aforementioned impact from externalisation activities, as well as the decline in Middle East & Africa sales of 14% to $499m. Russia sales declined by 42% (41% at CER) to $67m.

 

US

 

Product Sales of $3,102m; an increase of 3%. Q2 2018 sales increased by 6% to $1,615m.

 

The performance reflected the success of new medicines, including Lynparza, TagrissoImfinzi and Fasenra. Oncology sales in the US grew by 91% to $964m and sales of Fasenra in the US amounted to $67m in the half (Q2 2018: $48m). Strong sales of Farxiga and Brilinta contrasted with the impact of continued competitive intensity on sales of Symbicort, which declined by 21% to $439m. Symbicort delivered an improved performance in the second quarter, with sales in the US down by 14% to $256m.

 

Europe

 

Product Sales of $2,154m; a decline of 5% (14% at CER), reflecting the impacts of the entry of generic Crestor medicines in various markets in 2017. AstraZeneca expects these impacts to begin to recede in the second half of 2018.

 

The new medicines delivered an encouraging performance in the half. Oncology sales in Europe grew by 21% (9% at CER) to $505m, partly driven by Tagrisso sales growth of 83% (63% at CER) to $139m; Tagrisso was approved for the treatment of patients in the 1st-line EGFRm setting on 8 June 2018. Lynparza sales of $87m represented growth of 50% (36% at CER), partly benefitting from the approval on 8 May 2018 for use as a tablet-based treatment for platinum-sensitive ovarian cancer, regardless of BRCA status. Brilique sales growth of 27% (14% at CER) to $172m was accompanied by Forxiga sales growth of 45% (28% at CER) to $152m. Fasenra was successfully launched in several European countries, with a strong initial uptake.

 

Established ROW

 

Product Sales of $1,335m; a decline of 11% (14% at CER).

 

Japan sales declined by 14% (17% at CER) to $917m, reflecting the impact of the entry of generic Crestor medicines in 2017. AstraZeneca expects these impacts to recede in the second half of 2018. Crestor sales in Japan declined by 71% (72% at CER) to $76m. Excluding sales of Crestor, Japan sales increased by 4% (stable at CER) to $841m. The performance was also impacted by the aforementioned biennial price cut.

 

As seen in other regions, new medicines delivered an encouraging performance in Japan. Tagrisso is currently approved as a treatment in EGFR T790M-mutated NSCLC and sales increased by 15% (11% at CER) to $118m, reflecting focused activities to maximise testing and utilisation rates in the 2nd-line indication. On 19 January 2018, the Company announced that Lynparza tablets, approved as maintenance treatment for women with platinum-sensitive relapsed ovarian cancer regardless of BRCAm status, were approved in Japan and the medicine was launched in April 2018. On 2 July 2018, the Company announced that Lynparza was approved for use in patients with unresectable or recurrent BRCAm, human epidermal growth factor receptor 2 (HER2) negative breast cancer who have received prior chemotherapy.

 

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Financial Performance

 

Table 10: H1 2018 Reported Profit And Loss

 

 

Reported

 

H1 2018

H1 2017

% change

 

$m

$m

Actual

CER

Total Revenue

10,333

10,456

(1)

(5)

Product Sales

10,015

9,783

2

(2)

Externalisation Revenue

318

673

(53)

(54)

 

 

 

 

 

Cost of Sales

(2,146)

(1,844)

16

12

 

 

 

 

 

Gross Profit

8,187

8,612

(5)

(8)

Gross Margin(27)

78.6%

81.5%

-3

-3

 

 

 

 

 

Distribution Expense

(165)

(149)

10

5

% Total Revenue

1.6%

1.4%

R&D Expense

(2,641)

(2,802)

(6)

(9)

% Total Revenue

25.6%

26.8%

+1

+1

SG&A Expense

(5,008)

(4,658)

8

3

% Total Revenue

48.5%

44.5%

-4

-4

Other Operating Income & Expense

1,086

839

29

28

% Total Revenue

10.5%

8.0%

+2

+3

 

 

 

 

 

Operating Profit

1,459

1,842

(21)

(20)

% Total Revenue

14.1%

17.6%

-3

-3

Net Finance Expense

(640)

(742)

(14)

(7)

Joint Ventures and Associates

(33)

(26)

26

26

Profit Before Tax

786

1,074

(27)

(29)

Taxation

(151)

(116)

 

 

Tax Rate

19%

11%

 

 

Profit After Tax

635

958

(34)

(35)

 

 

 

 

 

Earnings Per Share

$0.54

$0.80

(32)

(34)

 


(27)  Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. H1 2018 Cost of Sales included $nil of costs relating to externalisation activities (H1 2017: $41m), which are excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.

 

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Table 11: Q2 2018 Reported Profit And Loss

 

 

Reported

 

Q2 2018

Q2 2017

% change

 

$m

$m

Actual

CER

Total Revenue

5,155

5,051

2

(1)

Product Sales

5,030

4,940

2

(1)

Externalisation Revenue

125

111

14

14

 

 

 

 

 

Cost of Sales

(1,012)

(950)

7

9

 

 

 

 

 

Gross Profit

4,143

4,101

1

(3)

Gross Margin(28)

79.9%

80.8%

-1

-2

 

 

 

 

 

Distribution Expense

(84)

(72)

16

12

% Total Revenue

1.6%

1.4%

R&D Expense

(1,362)

(1,349)

1

(1)

% Total Revenue

26.4%

26.7%

SG&A Expense

(2,551)

(2,358)

8

4

% Total Revenue

49.5%

46.7%

-3

-2

Other Operating Income & Expense

617

603

2

2

% Total Revenue

12.0%

11.9%

 

 

 

 

 

Operating Profit

763

925

(17)

(20)

% Total Revenue

14.8%

18.3%

-4

-4

Net Finance Expense

(332)

(420)

(21)

(2)

Joint Ventures and Associates

(19)

(13)

43

43

Profit Before Tax

412

492

(16)

(30)

Taxation

(93)

(46)

 

 

Tax Rate

23%

9%

 

 

Profit After Tax

319

446

(28)

(40)

 

 

 

 

 

Earnings Per Share

$0.27

$0.38

(27)

(38)

 


(28)  Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. Q2 2018 Cost of Sales included $nil of costs relating to externalisation activities (Q2 2017: $3m), which are excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.

 

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Table 12: Reconciliation Of Reported Profit Before Tax To EBITDA(29)

 

 

H1 2018

 

 

% change

 

$m

Actual

CER

Reported Profit Before Tax

786

(27)

(29)

Net Finance Expense

640

(14)

(7)

Joint Ventures and Associates

33

26

26

Depreciation, Amortisation and Impairment

1,393

9

6

EBITDA

2,852

(8)

(10)

 

Table 13: H1 2018 Reconciliation Of Reported To Core Financial Measures

 

 

 

 

Intangible
Asset
Amortisation &
Impairments

 

 

 

 

 

Reported

Restructuring

Diabetes
Alliance

Other(30)

Core(31)

Core
% change

 

$m

$m

$m

$m

$m

$m

Actual

CER

Gross Profit

8,187

55

92

8,334

(5)

(8)

Gross Margin(32)

78.6%

80.0%

-3

-3

Distribution Expense

(165)

(165)

10

5

R&D Expense

(2,641)

58

25

(2,558)

(2)

(5)

SG&A Expense

(5,008)

84

695

213

(138)

(4,154)

11

7

Other Operating Income & Expense

1,086

(10)

2

(374)

704

(27)

(27)

Operating Profit

1,459

187

814

213

(512)

2,161

(33)

(34)

% Total Revenue

14.1%

20.9%

-10

-10

Net Finance Expense

(640)

168

103

(369)

3

(1)

Taxation

(151)

(39)

(163)

(81)

103

(331)

(37)

(36)

Earnings Per Share

$0.54

$0.12

$0.51

$0.24

$(0.24)

$1.17

(37)

(39)

 


(29)  EBITDA is a non-GAAP financial measure. See the Operating and Financial Review for the definition of EBITDA.

(30)  Other adjustments include fair-value adjustments relating to contingent consideration on business combinations (see Note 4), discount unwind on acquisition-related liabilities (see Note 4) and provision movements related to certain legal matters (see Note 5).

(31)  Each of the measures in the Core column in the above table are non-GAAP financial measures. See the Operating and Financial Review for related definitions.

(32)  Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. H1 2018 Cost of Sales included $nil of costs relating to externalisation activities (H1 2017: $41m), which are excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.

 

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Table 14: Q2 2018 Reconciliation Of Reported To Core Financial Measures

 

 

 

 

Intangible
Asset
Amortisation
&
Impairments

 

 

 

 

 

Reported

Restructuring

Diabetes
Alliance

Other(33)

Core(34)

Core
% change

 

$m

$m

$m

$m

$m

$m

Actual

CER

Gross Profit

4,143

23

47

4,213

1

(3)

Gross Margin(35)

79.9%

81.3%

-1

-2

Distribution Expense

(84)

(84)

15

11

R&D Expense

(1,362)

31

13

(1,318)

3

1

SG&A Expense

(2,551)

48

346

106

(75)

(2,126)

12

8

Other Operating Income & Expense

617

(10)

1

(28)

580

(7)

(8)

Operating Profit

763

92

407

106

(103)

1,265

(18)

(22)

% Total Revenue

14.8%

24.5%

-6

-7

Net Finance Expense

(332)

84

50

(198)

9

6

Taxation

(93)

(19)

(83)

(40)

31

(204)

(25)

(21)

Earnings Per Share

$0.27

$0.06

$0.25

$0.13

$(0.02)

$0.69

(21)

(26)

 

Profit And Loss Commentary

 

Gross Profit

 

Reported Gross Profit declined by 5% (8% at CER) to $8,187m; Core Gross Profit declined by 5% (8% at CER) to $8,334m. The declines partly reflected the favourable impact of manufacturing variances realised in H1 2017, as well as the lower level of Externalisation Revenue.

 

The calculation of Reported and Core Gross Margin excludes the impact of Externalisation Revenue, thereby reflecting the underlying performance of Product Sales. The Reported Gross Margin declined by three percentage points to 78.6%; the Core Gross Margin declined by three percentage points to 80.0%. The movements were a result of the aforementioned favourable impact of manufacturing variances realised in H1 2017 and the inclusion

 


(33)  Other adjustments include fair-value adjustments relating to contingent consideration on business combinations (see Note 4), discount unwind on acquisition-related liabilities (see Note 4) and provision movements related to certain legal matters (see Note 5).

(34)  Each of the measures in the Core column in the above table are non-GAAP financial measures. See the Operating and Financial Review for related definitions.

(35)  Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. Q2 2018 Cost of Sales included $nil of costs relating to externalisation activities (Q2 2017: $3m), which are excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.

 

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Table of Contents

 

of the profit share on the collaboration with MSD, as well as the effect of losses of exclusivity on Crestor sales in Europe and Japan, partly offset by the impact of Oncology sales.

 

Operating Expenses

 

Reported R&D costs declined by 6% (9% at CER) to $2,641m, with the Company continuing to focus on resource prioritisation and productivity.

 

Core R&D costs declined by 2% (5% at CER) to $2,558m, reflecting productivity improvements across every therapy area and the favourable impact on development costs from the MSD collaboration. Targeted investment in the Company’s R&D programme is a consistent priority; the level of activity was unchanged in the half and Core R&D costs represented 25% of Total Revenue.

 

Reported SG&A costs increased by 8% (3% at CER) to $5,008m. Investment focused on commercial and medical-affairs support for launches and extensions of the new medicines. These include Lynparza, TagrissoImfinzi, Calquence and Fasenra; additional investment was also added to support sales growth in China. Intangible Asset Amortisation and Impairment charges of $346m, recorded within Reported SG&A Costs, partly reflected the impact of recent regulatory approvals granted for acquired medicines.

 

Core SG&A costs increased by 11% (7% at CER) to $4,154m, reflecting the aforementioned investments. H1 2017 was also a period when the Company delivered its lowest level of Core SG&A investment for a number of years; comparisons will be more favourable in the second half of this year.

 

Other Operating Income & 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 & Expense in the Company’s financial statements. Reported Other Operating Income & Expense increased by 29% (28% at CER) to $1,086m and included:

 

·                  $527m, reflecting an agreement with Luye Pharma for the rights to Seroquel and Seroquel XR in the UK, China and other international markets

 

·                  $346m, resulting from a legal settlement

 

·                  $63m, representing a gain on the spin-out of six potential new medicines from MedImmune’s early-stage inflammation and autoimmunity programme into an independent biotech company, as announced on 28 February 2018

 

Core Other Operating Income & Expense declined by 27% to $704m, with the difference to Reported Other Operating Income & Expense reflecting the aforementioned legal settlement.

 

Operating Profit

 

Reported Operating Profit declined by 21% (20% at CER) to $1,459m, driven by the aforementioned declines in Total Revenue and the Reported Gross Margin, as well as the increase in Reported SG&A costs. The Reported Operating Profit margin declined by three percentage points to 14% of Total Revenue. Core Operating Profit declined by 33% (34% at CER) to $2,161m, driven by the aforementioned factors, as well as the timing of divestments in FY 2018. The Core Operating Profit margin declined by 10 percentage points to 21% of Total Revenue.

 

Net Finance Expense

 

Reported Net Finance Expense declined by 14% (7% at CER) to $640m, reflecting an adverse foreign exchange impact in the comparative period and reduced levels of discount unwind on Acerta Pharma B.V. (Acerta Pharma) liabilities. Excluding the discount-unwind on acquisition-related liabilities and the adverse foreign exchange impact in the comparative period, Core Net Finance Expense increased by 3% (down by 1% at CER) to $369m.

 

Profit Before Tax

 

Reported Profit Before Tax declined by 27% (29% at CER) to $786m, reflecting the lower level of Externalisation Revenue, the lower Reported Gross Margin and the increase in Reported SG&A costs.

 

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Table of Contents

 

Taxation

 

The Reported and Core Tax rates for the half were 19%. The net cash tax paid for the half was $288m, representing 37% of Reported Profit Before Tax. The Reported and Core Tax rates for the comparative period were 11% and 19% respectively. The net cash tax paid for the comparative period was $336m, which was 31% of Reported Profit Before Tax.

 

Earnings Per Share (EPS)

 

Reported EPS of $0.54 represented a decline of 32% (34% at CER). The performance reflected a decline in Total Revenue, the Reported Gross Margin and increased Reported SG&A costs. Core EPS declined by 37% (39% at CER) to $1.17, impacted by the aforementioned factors as well as the decline in Core Other Operating Income & Expense.

 

Dividends

 

The Board has recommended an unchanged first interim dividend of $0.90 (68.4 pence, 7.92 SEK) per Ordinary Share.

 

Table 15: Cash Flow

 

 

H1 2018

H1 2017

Change

 

$m

$m

$m

Reported operating profit

1,459

1,842

(383)

Depreciation, amortisation and impairment

1,393

1,274

119

(Increase)/decrease in working capital and short-term provisions

(1,440)

(1,044)

(396)

(Gains)/losses on disposal of intangible assets

(593)

(596)

3

Non-cash and other movements

(310)

(468)

158

Interest paid

(296)

(334)

38

Tax paid

(288)

(336)

48

Net cash (outflow)/inflow from operating activities

(75)

338

(413)

 

The Company saw a net cash outflow from operating activities of $75m in the half, compared with an inflow of $338m in H1 2017, due primarily to the reduction in Reported Operating Profit. The increase in the movement of working-capital and short-term provisions partly reflected the release of provisions related to legal settlements as well as launch support for new medicines.

 

Net cash inflows from investing activities were $177m, compared with outflows of $351m in H1 2017. The difference partly reflected movements in short-term investments and fixed deposits, as well as a reduction in capital expenditure. The cash payment of contingent consideration in respect of the BMS share of the global Diabetes alliance amounted to $151m.

 

Net cash outflows from financing activities were $481m in the half, compared to inflows of $146m in H1 2017; the difference reflected new long-term loans in the earlier period.

 

Capital Expenditure

 

Capital expenditure amounted to $486m in the half, compared to $549m in H1 2017, which included the investment in the new global headquarters in Cambridge, UK, as well as strategic biotech manufacturing capacity in Sweden. AstraZeneca anticipates a reduction in capital expenditure over the full year vs. FY 2017.

 

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Table of Contents

 

Table 16: Debt And Capital Structure

 

 

At 30 Jun 2018

At 31 Dec 2017

At 30 Jun 2017

 

$m

$m

$m

Cash and cash equivalents

2,978

3,324

5,239

Other investments

881

1,300

1,121

Cash and short-term investments

3,859

4,624

6,360

Overdrafts and short-term borrowings

(2,818)

(845)

(1,159)

Finance leases

(5)

(18)

Current instalments of loans

(1,397)

(1,397)

(1,756)

Loans due after one year

(15,452)

(15,560)

(16,792)

Interest-bearing loans and borrowings (Gross Debt)

(19,667)

(17,807)

(19,725)

Net derivatives

465

504

353

Net Debt

(15,343)

(12,679)

(13,012)

 

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 Group’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 Group Companies’ reporting currency. In addition, the Group’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.

 

Table 17: Currency Sensitivities

 

The Company provides the following currency-sensitivity information:

 

 

 

Average Exchange
Rates vs. USD

 

Annual Impact Of 5%
Strengthening in
Exchange Rate vs. USD
($m)
(36)

Currency

Primary Relevance

FY 2017

H1 2018(37)

% change

Product
Sales

Core
Operating
Profit

EUR

Product Sales

0.89

0.83

+7

+135

+59

JPY

Product Sales

112.18

108.76

+3

+94

+64

CNY

Product Sales

6.75

6.37

+6

+180

+97

 


(36)  Based on best prevailing assumptions around currency profiles.

(37)  Based on average daily spot rates between 1 January and 30 June 2018.

 

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Average Exchange
Rates vs. USD

 

Annual Impact Of 5%
Strengthening in
Exchange Rate vs. USD
($m)
(36)

Currency

Primary Relevance

FY 2017

H1 2018(37)

% change

Product
Sales

Core
Operating
Profit

SEK

Operating Expenses

8.54

8.39

+2

+4

-67

GBP

Operating Expenses

0.78

0.73

+7

+24

-76

Other(38)

 

 

 

 

+86

+43

 

Related-Party Transactions

 

There have been no significant related-party transactions in the period.

 

Principal Risks and Uncertainties

 

It is not anticipated that the nature of the principal risks and uncertainties that affect the business, and which are set out on pages 63 to 65 of the Annual Report and Form 20-F Information 2017, will change in respect of the second six months of the financial year. Further information on our key risk management and assurance processes are set out on pages 210 to 220 of the Annual Report and Form 20-F Information 2017. The potential impact of Brexit continues to be treated as an integral part of the Principal Risks rather than as a stand-alone risk as summarised on page 63 of the Annual Report and 20-F Information 2017. Further information on our key risk management and assurance processes are set out on pages 210 to 220 of the Annual Report and 20-F Information 2017.

 

In summary, the principal risks and uncertainties listed in the Annual Report and 20-F Information 2017 are:

 

a) Product pipeline and intellectual property risks

 

Failure or delay in delivery of pipeline and new products; failure to meet quality, regulatory and ethical drug approval and disclosure requirements; failure to secure and protect product intellectual property.

 

b) Commercialisation risks

 

Competitive pressures including externally driven demand, pricing and access; failures or delays in quality execution of commercial strategies.

 

c) Supply chain and business execution risks

 

Failure to maintain supply of compliant, quality product; failure of information technology and data security and privacy; failure to deliver gains from productivity initiatives; failure to attract, develop, engage and retain talented and capable employees at all levels.

 

d) Legal, regulatory and compliance risks

 

Safety and efficacy of marketed products is questioned; adverse outcome of defence of product, pricing and practices litigation; failure to meet regulatory and ethical expectations on commercial practices, including bribery and corruption, and scientific exchanges.

 

e) Economic and financial risks

 

Failure to achieve strategic plans and meet targets and expectations.

 


(38)  Other important currencies are AUD, BRL, CAD, KRW and RUB.

 

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Table of Contents

 

Corporate And Business Development Update

 

a) Divestment Of Seroquel And Seroquel XR

 

On 8 May 2018, AstraZeneca announced that it had entered into an agreement with Luye Pharma for the sale and licence of the rights to Seroquel and Seroquel XR in the UK, China and other international markets. Seroquel, used primarily to treat schizophrenia and bipolar disorder, has lost its compound patent protection globally; the Seroquel XR formulation patents have also expired in the vast majority of its markets. The transaction completed in Q2 2018.

 

Luye Pharma will pay $538m in consideration, including $260m that was received upon completion. The total consideration, adjusted for time value, was recorded in Q2 2018 in Other Operating Income & Expense within the Company’s financial statements. AstraZeneca will continue to manufacture and supply Seroquel and Seroquel XR to Luye Pharma during a transition period.

 

Seroquel generated sales of $85m in FY 2017 in the markets covered by this agreement, while Seroquel XR generated $63m.

 

b) Divestment Of Atacand In Europe

 

On 24 July 2018, AstraZeneca announced that it had agreed to sell the commercial rights to Atacand (candesartan cilexetil) and Atacand Plus (fixed-dose combination of candesartan cilexetil and hydrochlorothiazide) in Europe to Cheplapharm Arzneimittel GmbH (Cheplapharm). Atacand is a prescription medicine for the treatment of heart failure and hypertension. The agreement is expected to complete in the third quarter of 2018. AstraZeneca will continue to manufacture and supply Atacand and Atacand Plus under a supply agreement and will continue to commercialise the medicines in all markets where it still holds the rights.

 

Cheplapharm will pay AstraZeneca $200m on completion of the agreement, plus a time-bound payment of $10m and sales-contingent milestones. The present value of the upfront and time-bound payment is expected to be reported as Other Operating Income in the Company’s financial statements. In FY 2017, global Product Sales for Atacand and Atacand Plus were $300m, including $86m in Europe.

 

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Sustainability Update

 

AstraZeneca’s sustainability ambition has three priority areas(39), aligned with the Company’s purpose and business strategy:

 

·                  Access to Healthcare

·                  Environmental Protection

·                  Ethics and Transparency

 

Recent developments and progress against the priorities are reported below:

 

a) Access To Healthcare

 

During the period, the Company signed a Memorandum of Understanding (MoU) with the Saudi Ministry of Health (the MoH) to launch the Healthy Lung programme in The Kingdom of Saudi Arabia (KSA). Healthy Lung in Saudi Arabia aims to enhance the management and increase public awareness of asthma and chronic obstructive pulmonary disease (COPD), ultimately to reduce the number of cases and related deaths. Under the MoU, the Company will work together with the MoH to drive a series of activities to raise awareness of the prevalence of respiratory diseases in KSA.

 

During the period, to mark World Hypertension Day on 17 May 2018, the Healthy Heart Africa (HHA) programme partnered with the ministries of health in both Kenya and Ethiopia to raise awareness of the dangers of high blood pressure (hypertension) and the need to adopt healthier lifestyles. Activities took place in both countries under the global theme of ‘Check Your Pressure’, which was celebrated through a series of events, including free blood-pressure screenings and speeches by cardiologists, government officials, HHA partners as well as the HHA team.

 

At the core of the work in the Young Health Programme (YHP) is a commitment to ensure young people have a voice in identifying health threats and needs, as well as planning and delivering solutions. During the period, the Company commenced a campaign entitled ‘Step Into My World’. This series of films featured interviews with young people involved in the YHP programme in India, Spain and Kenya describing the challenges they face and why involvement in the YHP can help.

 

On 25 May 2018, AstraZeneca submitted data on its access to healthcare activities to the Access to Medicines Index (ATMI), following the last submission in 2016 when the Company climbed eight positions and entered into the top 10. The ATMI analyses 20 of the world’s largest research-based pharmaceutical companies and how they make medicines, vaccines and diagnostics more accessible in low and middle-income countries.

 

b) Environmental Protection

 

On 18 April 2018, AstraZeneca published a paper in a peer-reviewed journal, Science of the Total Environment, focusing on developing sustainable solutions to inadequate sanitation and the resulting spread of infectious diseases and antimicrobial resistance (AMR) via contaminated water. Unfortunately, wastewater connection and treatment are not universal in many developing and emerging countries, especially in rural and peri-urban locations that are remote from central sewers. The paper describes the process optimisation of low-cost, scalable solutions to maximise the removal of total nitrogen and antibiotic resistance genes from domestic wastewater to protect environmental and human health. The results obtained from these laboratory-based studies are now being validated in Malaysia with the construction of a pilot plant to treat peri-urban wastewaters. This paper, ‘Co-optimization of sponge-core bioreactors for removing total nitrogen and antibiotic resistance genes from domestic wastewater’, is one of 13 published in peer-reviewed scientific journals relating to environmental protection in the first half of 2018, with the aim of furthering scientific development to address the challenges of pharmaceuticals in the environment.

 


(39)  These priorities were determined, along with a set of nine foundational areas, through a materiality assessment with external and internal stakeholders, respectively. Combined, they ensure the maximum possible benefit to patients, the Company, broader society and the planet. AstraZeneca’s sustainability priorities, foundations and commitments align with the United Nation’s Sustainable Development Goals (SDG), and in particular SDG three for ‘Good Health’.

 

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During the period, the Company was recognised by the Science Based Targets (SBT) initiative as one of over 100 global companies, and one of the first companies in the FTSE 350, to have environmental targets approved by SBT. The initiative is a partnership between the Carbon Disclosure Project, World Resources Institute, the World Wide Fund for Nature and the UN Global Compact. Only targets that meet strict criteria are approved. Importantly, companies setting science-based targets must seek to not only reduce emissions in their own operations, but also within their value chains, which can move entire industries toward more efficient and greener supply chains. The Company further showcased its environmental protection commitments to support World Earth Day on 22 April 2018.

 

Table 18: Environmental Protection Targets(40)

 

Target

Plan Year

Q1 2018 Performance(40)

Lead the industry to manage Pharmaceuticals in the Environment

2025

On Plan: Ecopharmacovigilence (EPV) spatial environmental risk map updates have been commissioned and product specific concentration (measured vs. predicted safe) distributions are being developed. These will form the basis for a first published EPV report.

Ensure 90% of API(41) syntheses meet resource-efficiency targets at launch

2025

Not Yet Started: Update anticipated Q3 2018.

Develop resource-efficiency targets for biologic products

2025

On Plan: Benchmarking of biologics process resource efficiency data through American Chemical Society Green Chemistry Institute Pharmaceutical Roundtable (ACS GCIPR)

Develop a product sustainability index and pilot approach

2019

On Plan: Project launched to develop a product environmental sustainability rating system which will be piloted internally prior to external publication in 2019.

Achieve SBT for greenhouse-gas emissions

2025

Lagging: (AstraZeneca’s operational footprint has increased 6% vs. Q1 2015.)
Scope 1 and 2 emissions -11%
Scope 3 emissions +12%(42)

100% renewable power consumption globally by 2025; interim ambition of 100% in the US and Europe by 2020

2025

On Plan: 60% of sites already powered by renewable energy.

Reduce energy consumption by 10% against a 2015 baseline

2025

On Plan: Energy consumption -2% compared with 2015.

Expand the number of ‘green fleet’ vehicles

2025

On Plan: Established a ‘Green Mobility’ charter, with a number of European locations already implementing ‘green fleet’ vehicles, such as Sweden and Poland.

Maintain water usage as our business grows against a 2015 baseline

2025

On Plan: Water use -15% vs. 2015.
Water audits and efficiency projects have driven large reductions and cost savings.

Reduce waste 10% below the 2015 baseline

2025

On Plan: Waste generated -7% vs. 2015 (Hazardous waste generated 3% vs. 2015; and Non-hazardous waste -11% vs. 2015)

 


(40)  Data reported as of 31 March 2018 due to reporting lag.

(41)  Active pharmaceutical ingredient.

(42)  Scope 3 increase is a result of growing emissions from pressurised metered dose inhalers (pMDI) up 43% since 2015. Investigating implementation of lower impact propellants.

 

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c) Ethics And Transparency

 

The Company commenced a project to replace the use of Horseshoe Crab blood in medicines development. Over 600,000 horseshoe crabs are captured each year to donate around 30% of their blood, which is used in required regulatory testing. Although there are welfare procedures in harvesting the blood, between 10-30% of donor crabs die in the process. AstraZeneca is exploring viable alternatives to support the longevity of this vulnerable species.

 

AstraZeneca, together with GlaxoSmithKline, Teva Pharmaceutical Industries Ltd. and Takeda launched the Responsible Health Initiative (RHI) in response to the need to improve the social, ethical, and environmental impact within supply chains. Powered by sustainability-specialist software platform EcoVadis, the RHI aims to create synergies between companies active in the healthcare and pharmaceutical sector to raise standards and improve sustainability performance across the industry.

 

During the period, the Company was featured in an article in the Wall Street Journal, ‘Companies Find Value in Combining Compliance, Sustainability’. The article featured AstraZeneca’s work to leverage synergies and better manage risk from combining the compliance and sustainability functions in the organisational structure.

 

Other Developments

 

During the period, the Company entered into a new partnership with the University of Cambridge to fund new research on global sustainability challenges. One of nine founding organisations, The Prince of Wales Global Sustainability Fellowship Programme with the Cambridge Institute for Sustainability Leadership (CISL) aims to attract academics from around the world to identify breakthrough solutions to meet the UN Sustainable Development Goals (SDGs). AstraZeneca’s research scope will focus on SDG3: Good health and wellbeing. The research will explore how world health systems, seeing increasing strain on resources due to an overall rise in non-communicable diseases (NCDs), can deliver higher standards of care to a growing and ageing population.

 

On 21 May 2018, at the 71st World Health Assembly (WHA), AstraZeneca announced a new sustainability project in partnership with the Cambridge Institute for Sustainability Leadership. The pilot will see the introduction of portable bio digesters to Dunga Beach on Lake Victoria in Kenya, which will allow the local community to process organic waste into valuable clean energy. It will study the impact on the environment and local economy and provide potential insight into the effect of clean cooking on respiratory health.

 

In addition, AstraZeneca hosted two side-meetings at the WHA ahead of the UN High Level Meeting on non-communicable diseases (NCDs) in September 2018. On 21 May 2018, the Company hosted a panel focused on Driving Novel Partnerships Throughout the NCD Life-Cycle. For AstraZeneca, the event was hosted by Executive Vice President for Sustainability, Katarina Ageborg, engaging over 90 representatives from industry, civil society, academia, multilaterals and governments. On 22 May 2018, the Company welcomed policy makers, civil society, research experts and journalists to a second YHP event - Turning The Tide On NCDs: Why We Need To Focus On Youth. The discussion focused on two important pieces of research commissioned by the YHP, which highlighted how critical it is for the world health community to focus on adolescence, if the rising global death toll from NCDs is to be stemmed.

 

In July, the Company commenced a sustainability materiality assessment working with specialist advisory BSR. AstraZeneca last conducted a materiality assessment in 2015; the 2018 refresh will guide future strategy and capability build. Initial input was sought from the Sustainability Advisory Board and from employees through virtual focus groups with a cross-section of business units and geographies. These insights will additionally support a robust employee engagement programme around sustainability.

 

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Research And Development Update

 

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 19: Update From The Late-Stage Pipeline

 

Regulatory Approvals

4

-                    Lynparza - breast cancer (JP)

-                    Tagrisso - lung cancer (1st line) (EU)

-                    Imfinzi - unresectable, Stage III NSCLC (JP)

-                    Lokelma - hyperkalaemia (US)

Regulatory Submissions and/or Acceptances

3

-                    Forxiga - type-1 diabetes (JP)

-                    Forxiga combination with Onglyza and metformin - type-2 diabetes (EU)

-                    Bydureon - type-2 diabetes CVOT (US)

Major Phase III

Data Readouts or Other Major Developments

6

-                    Lynparza - ovarian cancer (1st line): primary PFS endpoint met

-                    Imfinzi - unresectable, Stage III NSCLC: primary OS endpoint met

-                    selumetinib - thyroid cancer: did not meet primary endpoint

-                    Bydureon BCise - type-2 diabetes; new device: positive CHMP opinion

-                    Fasenra - COPD: did not meet primary endpoints

-                    lanabecestat - Alzheimer’s disease: termination of Phase III programme

New Molecular Entities

and Major Lifecycle Medicines in Phase III Trials or Under Regulatory Review

12

Oncology

-                    Lynparza - multiple cancers(43)

-                    Tagrisso - lung cancer(43)

-                    Imfinzi - multiple cancers(43)

-                    Calquence - blood cancers

-                    moxetumomab pasudotox - leukaemia(43)

-                    tremelimumab - multiple cancers

-                    selumetinib - NF-1(44)

-                    savolitinib - kidney cancer

 

CVRM

-                    roxadustat - anaemia(43)

 

Respiratory

-                    PT010 - COPD / asthma

-                    tezepelumab - severe, uncontrolled asthma

 

Other

-                    anifrolumab - lupus

Total Projects in Clinical Pipeline

130

 

 


(43)  Under regulatory review. The table shown above as at today.

(44)  Phase II data, with potential for registration.

 

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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 Lynparza, TagrissoImfinzi and Calquence are already benefitting patients. An extensive pipeline of small-molecule and biologic 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.

 

In June 2018, the Company presented further evidence of its progress at the American Society of Clinical Oncology (ASCO) annual meeting in Chicago, US. This was illustrated by seven ‘Best of ASCO’ presentations and 14 oral presentations from a total of 91 accepted abstracts. These presentations highlighted AstraZeneca’s four scientific platforms: Immuno-Oncology (IO), DNA Damage Response, Anti-Drug Conjugates, and Tumour Drivers and Resistance.

 

a) Lynparza (multiple cancers)

 

On 27 June 2018, AstraZeneca announced positive results from the randomised, double-blinded, placebo-controlled, Phase III SOLO-1 trial of Lynparza tablets. Patients with BRCAm, advanced ovarian cancer, treated with 1st-line Lynparza maintenance therapy, had a statistically-significant and clinically-meaningful improvement in PFS compared to placebo. The safety and tolerability profile of Lynparza was consistent with previous trials. Based upon these data, AstraZeneca and MSD have initiated discussions with health authorities regarding regulatory submissions.

 

During the period, the Company announced that Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) had approved the chemo-sparing regimen of Lynparza tablets as a monotherapy for patients with unresectable or recurrent BRCAm, HER2 negative breast cancer who have received prior chemotherapy. The ability to offer an alternative to chemotherapy treatment for patients with metastatic breast cancer is an important factor as patients are expected to receive multiple lines of chemotherapy during the course of their disease.

 

At the aforementioned ASCO meeting, data from an ‘all-comers’ trial assessing Lynparza in combination with abiraterone as a treatment for patients with metastatic castration-resistant prostate cancer (mCRPC) was selected as one of the ‘Best of ASCO’ presentations. The trial showed an improvement in median radiological progression-free survival (rPFS), compared to abiraterone monotherapy, an SoC in mCRPC.

 

Study 08 was a randomised, double-blinded, multi-centre Phase II trial, comparing Lynparza in combination with abiraterone (n=71) to abiraterone monotherapy (n=71) in patients with previously-treated mCRPC, regardless of homologous recombination repair (HRR) mutation status. Median rPFS was 13.8 months with Lynparza and abiraterone, compared to 8.2 months with abiraterone alone (hazard ratio (HR) 0.65; 95% CI 0.44-0.97; p=0.034). Pre-specified exploratory subgroup analyses demonstrated an rPFS improvement in patients, regardless of HRR status (see Table 17). Study 08 was not powered for subgroup analyses and secondary endpoints.

 

Table 20: Lynparza Study 08 in prostate cancer; rPFS by HRR status

 

 

Median rPFS
(months)

 

 

 

Lynparza +
abiraterone

Abiraterone

HR

95% CI

Overall (n=142)

13.8

8.2

0.65

0.44-0.97

HRR mutation (n=21)

17.8

6.5

0.74

0.26-2.12

Wild-type HRR (n=35)

15.0

9.7

0.52

0.24-1.15

Partially-characterised HRR status (n=86)(45)

13.1

6.4

0.67

0.40-1.13

 

The safety profile of Lynparza and abiraterone was generally manageable, with no detrimental impact on quality of life, compared to abiraterone alone.

 


(45)  Those patients whose plasma and blood samples both tested negative for HRR mutations, but for whom no valid tumour test result was available.

 

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Table 21: Key Lynparza Combination Trials

 

Name

Phase

Population

Design

Timelines

Status

PAOLA-1(46)

III

Stage IV, 1st-line ovarian cancer

Lynparza maintenance + bevacizumab vs.
bevacizumab maintenance

FPCD(47) Q2 2015

LPCD(48) Q2 2018

First data anticipated H2 2019

Recruitment completed

DuO-O

III

Stage IV, 1st-line ovarian cancer

Lynparza + Imfinzi

Planning (announced at the SGO 2018 annual meeting)

MEDIOLA

I/II

Advanced, 2nd-line gBRCAm(49) ovarian cancer

Stage IV, 1st to 3rd-line gBRCAm, HER2-negative breast cancer
Stage IV, 2nd-line small cell lung cancer

Stage IV, 2nd-line gastric cancer

Lynparza + Imfinzi

FPCD Q2 2016

Recruitment ongoing

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

VIOLETTE

II

Stage IV, advanced, triple-negative breast cancer:

-HRRm(50) (BRCA)
-HRRm (non-BRCA)
-Non-HRRm

Lynparza + ATR (AZD6738)

Lynparza + WEE1 (AZD1775)

Lynparza

FPCD Q2 2018

Recruitment ongoing

PROpel

III

Stage IV, advanced, castration-resistant prostate cancer

Lynparza + abiraterone vs. abiraterone

Planning
(announced at the ASCO 2018 annual meeting)

 


(46)  Conducted by the ARCAGY/Groupe d’Investigateurs National des Etudes des Cancers Ovariens et du sein.

(47)  First patient commenced dosing.

(48)  Last patient commenced dosing.

(49)  Germline BRCAm.

(50)  Homologous Recombination Repair mutated.

 

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Name

Phase

Population

Design

Timelines

Status

BAYOU

II

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

Lynparza + Imfinzi vs. Imfinzi

FPCD Q1 2018

Recruitment ongoing

 

b) Tagrisso (lung cancer)

 

On 8 June 2018, AstraZeneca announced that the EMA had granted marketing authorisation for Tagrisso as a monotherapy for the 1st-line treatment of adult patients with locally-advanced or metastatic EGFRm NSCLC; the approval followed the positive opinion, published in April 2018, from the CHMP. The approval was based on results from the 1st-line NSCLC Phase III FLAURA trial, which showed that the length of patients’ PFS nearly doubled when treated with Tagrisso, compared to patients treated with current SoC, namely earlier-generation EGFR tyrosine kinase inhibitors.

 

During the period the Company commenced the Phase III LAURA trial assessing the effects of Tagrisso following chemoradiation in patients with unresectable, Stage III EGFRm NSCLC.

 

c) Imfinzi (lung and other cancers)

 

During the period, the US FDA accepted a supplemental Biologics License Application to update the dosing regimen for all indications of Imfinzi to a more convenient infusion schedule of 1,500mg, fixed-dose, once every four weeks, or, for patients weighing less than 30kg, a 20mg/kg dose every four weeks. Imfinzi is currently approved in the US at 10mg/kg administered as 60-minute intravenous infusion every two weeks for the treatment of certain patients with locally-advanced or metastatic urothelial carcinoma or unresectable, Stage III NSCLC. The submitted data suggested that there are no clinically-significant differences anticipated in efficacy or safety between every two weeks and every four weeks or the flat dosing, compared to the weight-based dosing. A regulatory decision is anticipated in the final quarter of the year.

 

The Company continues to advance multiple monotherapy trials of Imfinzi and combination trials of Imfinzi with tremelimumab and other potential new medicines:

 

Lung Cancer

 

During the period, the Company was granted approvals for Imfinzi in Japan, Switzerland, India and Brazil for the treatment with Imfinzi of patients with unresectable, Stage III NSCLC, whose disease had not progressed following concurrent platinum-based chemoradiotherapy (CRT). CRT, followed by monitoring for disease progression, has been the SoC in this setting for over two decades and multiple trials have failed to improve upon this. The approvals of Imfinzi were based on positive PFS data from the Phase III PACIFIC trial, in which Imfinzi demonstrated an improvement in median PFS of 11.2 months compared to placebo, representing a 48% reduction in relative risk of progression or death in all patients, regardless of PD-L1 status. A regulatory submission, based on the PACIFIC trial data, is currently under review in the EU, where the Company anticipates a regulatory decision in the second half of the year.

 

During the period, the Company announced that Imfinzi had met the second and final primary endpoint from the Phase III PACIFIC trial in patients with unresectable, Stage III NSCLC, demonstrating an OS benefit which was both statistically significant and clinically meaningful. These positive OS data provided compelling evidence of the durable responses that Imfinzi can offer in this earlier stage of lung cancer, where patients are treated with curative intent. Five-year OS rates are currently 15-20% in Stage III NSCLC; Imfinzi has the potential to substantially improve these numbers.

 

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Table 22: Ongoing Key IO Lung Cancer Late-Stage Trials

 

Name

Phase

Population

Design

Timelines

Status

Stage I, II & III (treatment with curative intent)

ADJUVANT (BR.31)(51)

III

Stage Ib-IIIa NSCLC

Imfinzi vs. placebo

FPCD Q1 2015

First data anticipated 2019+

Recruitment ongoing

PACIFIC

III

Unresectable, Stage III NSCLC

Imfinzi vs. placebo post CRT

FPCD Q2 2014

LPCD Q2 2016

Recruitment completed
PFS and OS primary endpoints both met

PACIFIC2

III

Unresectable, Stage III NSCLC

Platinum-based concurrent CRT +/- Imfinzi

FPCD Q2 2018

First data anticipated 2019+

Recruitment ongoing

Stage IV (metastatic disease)

PEARL

III

Stage IV, 1st line NSCLC (Asia)

Imfinzi vs. SoC chemotherapy

FPCD Q1 2017

First data anticipated 2019+

Recruitment ongoing

MYSTIC

III

Stage IV, 1st line NSCLC

ImfinziImfinzi + treme vs. SoC chemotherapy

FPCD Q3 2015

LPCD Q3 2016

Final OS data anticipated H2 2018

Recruitment completed

PFS primary endpoint not met

NEPTUNE

III

Stage IV, 1st line NSCLC

Imfinzi + treme vs. SoC chemotherapy

FPCD Q4 2015

LPCD Q2 2017

First data anticipated H1 2019

Recruitment completed

POSEIDON

III

Stage IV, 1st line NSCLC

Imfinzi + SoC, Imfinzi + treme + SoC vs. SoC chemotherapy

FPCD Q2 2017

First data anticipated H2 2019

Recruitment ongoing

CASPIAN

III

Stage IV, 1st line small-cell lung cancer

Imfinzi + SoC, Imfinzi + treme + SoC vs. SoC chemotherapy

FPCD Q1 2017

LPCD Q2 2018
First data anticipated H2 2019

Recruitment completed

 


(51)  Conducted by the National Cancer Institute of Canada.

 

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Other Cancers

 

Table 23: Key IO Non-Lung Cancer Late-Stage Trials

 

Name

Phase

Population

Design

Timelines

Status

Stage I, II & III (non-metastatic disease)

POTOMAC

III

Non-muscle invasive bladder cancer

Imfinzi + SoC BCG(52) vs. SoC BCG

FPCD Q3 2018

First data anticipated 2019+

Recruitment
ongoing

Stage IV (metastatic disease)

DANUBE

III

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

ImfinziImfinzi + treme vs. SoC chemotherapy

FPCD Q4 2015

LPCD Q1 2017

First data anticipated H2 2019

Recruitment completed

KESTREL

III

Stage IV, 1st line head and neck squamous cell carcinoma (HNSCC, head and neck cancer)

ImfinziImfinzi + treme vs. SoC

FPCD Q4 2015

LPCD Q1 2017

First data anticipated H2 2018

Recruitment completed

EAGLE

III

Stage IV, 2nd-line HNSCC

ImfinziImfinzi + treme vs. SoC

FPCD Q4 2015

LPCD Q3 2017

First data anticipated H2 2018

Recruitment completed

HIMALAYA

III

Stage IV, 1st line hepatocellular carcinoma (liver cancer)

ImfinziImfinzi + treme (two dosing regimens) vs. sorafenib

FPCD Q4 2017

First data anticipated 2019+

Recruitment
ongoing

 

 

 

 

 

 

 


(52)  Bacillus Calmette-Guerin.

 

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d) Calquence

 

At the aforementioned ASCO meeting, the Company presented new data for Calquence from the Phase II clinical trial (WM-001) of patients with treatment-naïve (TN) and R/R Waldenström macroglobulinemia (WM). Calquence demonstrated an objective response rate of 93% in both TN and R/R patients and the median duration of response, PFS and OS were not reached after a median follow up of over two years. The two-year PFS rate was 90% in TN patients and 82% in R/R patients. A tolerable safety profile was demonstrated with Calquence therapy in patients with WM.

 

In R/R MCL, a regulatory submission was made for Calquence in Canada with other countries underway aimed in extending the regulatory approval in the US granted on 31 October 2017.

 

e) Selumetinib

 

During the period, AstraZeneca and MSD reported that the selumetinib ASTRA trial in differentiated thyroid cancer (DTC) did not meet its primary endpoint. The ASTRA trial is a randomised, double-blinded, Phase III trial in high-risk DTC. Trial results demonstrated that treatment with a short course of selumetinib and single dose adjuvant radioactive iodine therapy did not meet its primary endpoint of improvement in complete remission rate compared to placebo. The full data will be presented at a forthcoming medical meeting.

 

At the aforementioned ASCO meeting, the Company, along with the US National Cancer Institute, presented initial Phase II data from the ongoing SPRINT trial, evaluating selumetinib as monotherapy in paediatric patients with NF-1 and plexiform neurofibromas. The data demonstrated a sustained reduction in tumour burden for patients treated with selumetinib and an encouraging improvement in patient-reported outcomes, such as pain and motor function. Partial responses (tumour-volume declines from baseline of >20%) were observed in 36 of the 50 children (72%).

 

CVRM

 

Cardiovascular (CV), renal and metabolic diseases are key areas of focus as the Company sets the challenge to better understand how its portfolio of medicines might be used to help address multiple risk factors or co-morbidities. Today, AstraZeneca is delivering life-changing results in the main CV-disease areas and their complications. The Company is investing in science to demonstrate CV and mortality benefits, by slowing the underlying progression of CV-related diseases and protecting the organs of the CV system. Ultimately, AstraZeneca is looking to do more than just slow CV-related disease, by modifying or even halting the natural course of the disease itself and regenerate organs. The net result is a strong, continued commitment to new CVRM-treatment options that have the potential to deliver improved outcomes to hundreds of millions of patients.

 

At the American Diabetes Association congress in June 2018, the Company presented 45 abstracts, including seven late-breaking data disclosures, such as first pre-clinical and clinical data for MEDI0382 (a novel oxyntomodulin-like peptide) for patients with type-2 diabetes. In a double-blinded Phase IIa trial, 51 patients with type-2 diabetes were randomised (1:1) to receive 200 µg of MEDI0382 subcutaneously, or placebo, daily. Results after six weeks of treatment demonstrated that MEDI0382 significantly improved glycaemic control and reduced body weight, compared to placebo. A separate exploratory analysis of the Phase IIa trial evaluated the effects of MEDI0382 on hepatic fat content in overweight patients with type-2 diabetes. Results of the analysis demonstrated that patients treated with MEDI0382 showed a significant relative reduction from baseline in hepatic fat content vs. placebo (-39.1% vs. -19.5%; p=0.0172). MEDI0382 is currently in Phase IIb testing; expected results in the second half of the year will inform a potential Phase III initiation decision.

 

a) Brilinta (CV disease)

 

During the period, results from a new real-world analysis of more than 45,000 heart-attack survivors was published in Heart, suggesting that treatment with Brilinta plus low-dose aspirin, compared to clopidogrel plus low-dose aspirin, was associated with an 18% reduction of risk (adjusted hazard ratio (HR 0.82 (0.70 to 0.97)) over one year for the composite endpoint of death, heart attack or stroke, in patients with moderate kidney disease (as defined by estimated glomerular filtration rate of 30-60ml/min). The results from PRACTICAL, an analysis of data from the ongoing SWEDEHEART registry, provided real-world evidence that patients who survived a heart attack (also known as myocardial infarction (MI)) and have moderate kidney disease, had a lower risk of experiencing future CV events when treated with Brilinta rather than clopidogrel, an older and generic medicine.

 

b) Farxiga (diabetes)

 

In May 2018, AstraZeneca announced that it had submitted a supplemental new drug application (sNDA) to Japan’s PMDA for the use of Forxiga as an oral adjunct treatment to insulin in adults with type-1 diabetes. The sNDA was based on Phase III data from the DEPICT (Dapagliflozin Evaluation in Patients with Inadequately Controlled Type 1 Diabetes) clinical programme for Forxiga in type-1 diabetes and a dedicated

 

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trial in Japanese patients. Results showed that Forxiga, when given as an oral adjunct treatment to insulin in patients with inadequately-controlled type-1 diabetes, demonstrated significant and clinically-meaningful reductions from baseline in HbA1c(53), weight and total daily insulin dose at 24 and 52 weeks, compared to placebo, at both 5mg and 10mg doses.

 

During the period, the Company received US FDA and EMA regulatory submission acceptances for Farxiga, based on the DERIVE trial. DERIVE is a Phase III trial, designed to evaluate the clinical efficacy and safety of Farxiga in patients with type-2 diabetes and moderate renal impairment (chronic kidney disease (CKD) Stage 3A). On 19 July 2018, the Company received EU acceptance of the regulatory submission for the triple combination therapy (Farxiga + Onglyza + metformin) for the potential treatment of type-2 diabetes.

 

c) Bydureon (type-2 diabetes)

 

During the period, the Company received US FDA regulatory submission acceptance for Bydureon, based on the CV outcomes trial, EXSCEL. This Phase IIIb/IV trial (EXenatide Study of Cardiovascular Event Lowering) compared the effect of once-weekly Bydureon (exenatide extended-release) vs. placebo, when added to usual type-2 diabetes treatments, on the risk of a major adverse cardiac event (MACE), a composite endpoint of time to first occurrence of CV death, non-fatal myocardial infarction (MI) or nonfatal stroke, in adults with type-2 diabetes at a wide range of CV risk. The trial met its primary safety objective of non-inferiority for MACE. Fewer CV events were observed in the Bydureon arm of the trial; the efficacy objective of a superior reduction in MACE, however, did not reach statistical significance.

 

In June 2018, AstraZeneca announced that the CHMP had adopted a positive opinion, recommending inclusion of Bydureon BCise device (2mg prolonged-release suspension for injection) as a new formulation within the marketing authorisation for Bydureon for the treatment of type-2 diabetes. The CHMP recommendation was based on the clinical trials DURATION-NEO-1 and NEO-2. DURATION-NEO-1 was a 28-week, randomised, open-label, comparator-controlled trial (n=375), which showed that once-weekly Bydureon demonstrated an HbA1c reduction of 1.4% vs. 1.0% for twice-daily Byetta (exenatide) injection at 28 weeks (baseline HbA1c 8.5% and 8.4%, respectively). Additionally, Bydureon administered once weekly via the BCise device demonstrated a mean weight reduction of 1.5kg as monotherapy, vs. a reduction of 1.9kg (baseline was 97kg), when combined with certain oral, antidiabetic medicines.

 

Table 24: Major Ongoing Cardiovascular Outcomes Trials

 

Major ongoing CVRM outcomes trials are highlighted in the following table:

 

Medicine

Trial

Mechanism

Population

Primary Endpoint(s)

Timeline

Farxiga

DECLARE

SGLT2 inhibitor

c.17,000(54) patients with type-2 diabetes

Superiority for MACE or superiority for the composite endpoint of CV death or hospitalisation for heart failure

Data anticipated H2 2018 (final analysis)

Farxiga

DAPA-HF

SGLT2 inhibitor

c.4,500 patients with HF(55)

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

FPCD
Q1 2017

Data anticipated 2019+

 


(53)  A marker used to measure long-term blood sugar (glucose) levels.

(54)  Includes c.10,000 patients who have had no prior index event and c.7,000 patients who have suffered an index event.

(55)  Heart failure.

 

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Medicine

Trial

Mechanism

Population

Primary Endpoint(s)

Timeline

Farxiga

DAPA-CKD

SGLT2 inhibitor

c.4,000 patients with CKD

Time to first occurrence of >50% sustained decline in eGFR(56) or reaching ESRD(57) or CV death or renal death

FPCD
Q1 2017

Data anticipated 2019+

Brilinta

THEMIS

P2Y12 receptor antagonist

c.19,000 patients with type-2 diabetes and CAD without a history of MI or stroke

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

Data anticipated H1 2019

Brilinta

THALES

P2Y12 receptor antagonist

c.13,000 patients with acute ischaemic stroke or transient ischaemic attack

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

Data anticipated 2019+

Epanova

STRENGTH

Omega-3 carboxylic acids

c.13,000 patients with mixed dyslipidaemia

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

Data anticipated 2019+

 

d) Lokelma (hyperkalaemia)

 

In May 2018, the US FDA approved Lokelma (sodium zirconium cyclosilicate), formerly ZS-9, for the treatment of adult patients with hyperkalaemia, a serious condition characterised by elevated potassium levels in the blood associated with CV, renal and metabolic diseases.

 

The risk of hyperkalaemia increases significantly for patients with CKD and for those who take common medications for HF, such as renin-angiotensin-aldosterone system (RAAS) inhibitors, which can increase levels of potassium in the blood. To help prevent the recurrence of hyperkalaemia, RAAS-inhibitor therapy is often modified or discontinued, which can compromise cardio-renal outcomes and increase the risk of death.

 

The Company expects a broad commercial launch of Lokelma to begin in early 2019, once appropriate levels of inventory are available. Lokelma is manufactured through a proprietary, complicated manufacturing process at a dedicated production facility.

 

e) Roxadustat (anaemia)

 

During the period, the ALPINE Phase III clinical-trial programme for roxadustat completed patient enrolment. The programme, sponsored by FibroGen, Inc. (FibroGen) and its partners Astellas, Inc. (Astellas) and AstraZeneca, has now enrolled approximately 9,000 patients across seven clinical trials. ALPINE was designed to support the US regulatory submission for roxadustat as a treatment for anaemia associated with CKD in both dialysis-dependent (DD) and non-dialysis-dependent (NDD) CKD patients. AstraZeneca is conducting two large trials, ROCKIES and OLYMPUS, to support efficacy and CV safety in DD and NDD CKD patients, respectively. Top-line data from these trials is anticipated in H2 2018 with a pooled safety analysis anticipated to be available in H1 2019.

 


(56)  Estimated glomerular filtration rate.

(57)  End-stage renal disease.

 

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On 31 May 2018, Astellas and FibroGen announced that the fourth Japanese Phase III trial for roxadustat had met its primary endpoint. This trial evaluated the efficacy and safety of roxadustat compared to erythropoietin (darbepoetin alfa) in haemodialysis-dependent CKD patients with anaemia and previously treated with erythropoietin. Average haemoglobin (Hb) levels were effectively maintained at 10.99 g/dL at weeks 18 to 24 in roxadustat-treated haemodialysis patients previously treated with erythropoietin. The primary efficacy endpoint of change in average Hb levels from baseline to weeks 18 to 24 was -0.04 g/dL and -0.03 g/dL in the roxadustat-treated group and in the darbepoetin-treated group, respectively. Roxadustat was well tolerated and the safety profile was consistent with that observed in previous trials both in DD and NDD.

 

During the period, the first patient was randomised into a Phase II/III trial in China to evaluate roxadustat for the treatment of anaemia in patients with non-transfusion-dependent, myelodysplastic syndrome (MDS). A Phase III US/EU trial in transfusion-dependent MDS patients is also currently recruiting.

 

RESPIRATORY

 

AstraZeneca’s Respiratory focus is aimed at transforming the treatment of asthma and COPD through combined inhaled therapies, biologics for the unmet medical needs of specific patient populations and an early pipeline focused on disease modification.

 

The growing range of medicines includes up to four anticipated launches between 2017 and 2020; of these, Bevespi and Fasenra are already benefitting patients. The capability in inhalation technology spans both pressurised, metered-dose inhalers and dry-powder inhalers to serve patient needs, as well as the innovative Aerosphere Delivery Technology, a focus of AstraZeneca’s future-platform development for respiratory-disease combination therapies.

 

During the period, AstraZeneca attended the American Thoracic Society (ATS) 2018 International Congress, in San Diego, US. The Company presented 60 accepted abstracts, including five oral presentations that focused on key areas of unmet need in asthma and COPD. Highlights included the results from two Phase III trials, SYGMA 1 and SYGMA 2, of Symbicort Turbuhaler (budesonide/formoterol) in mild asthma, which were presented as late-breaking abstracts. Additionally, eight abstracts were also presented, including one late-breaking abstract that underscored the growing body of evidence on Fasenra and the role of this new medicine for patients with severe, eosinophilic asthma.

 

a) Tudorza (COPD)

 

In June 2018, the Company and its partner, Circassia, submitted an sNDA for Tudorza to the US FDA. The submission was based on the results from the ASCENT trial, which fulfilled a post-approval commitment to conduct a randomised, controlled trial to evaluate the risk of MACE with Tudorza as a treatment for patients with COPD.

 

The trial achieved its co-primary endpoints for safety (MACE) and efficacy (exacerbation reduction). It is anticipated that the US label will be updated accordingly.

 

b) Duaklir (COPD)

 

In May 2018, AstraZeneca and Circassia submitted a New Drug Application (NDA) to the US FDA for Duaklir for the maintenance treatment of patients with COPD and reduction of exacerbations. The NDA included data from three Phase III trials, including the AMPLIFY trial, which demonstrated statistically-significant and clinically-meaningful improvements in lung function for the combination of aclidinium bromide/formoterol twice-daily, compared with the combination’s individual components of either aclidinium bromide or formoterol.

 

c) Fasenra (COPD)

 

On 30 May 2018, the Company announced top-line results from the Phase III TERRANOVA trial, the second of two pivotal Phase III trials for Fasenra in patients with moderate to very severe COPD. The trial did not meet the primary endpoint of a statistically-significant reduction of exacerbations. This followed the prior announcement that the first pivotal Phase III trial, GALATHEA, did not meet its primary endpoint.

 

The safety and tolerability findings in GALATHEA and TERRANOVA were consistent with those observed in previous trials with Fasenra. A full evaluation of the data is ongoing, and the Company anticipates submission of the results for presentation at a forthcoming medical meeting. The Company does not currently intend to make a regulatory submission.

 

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OTHER

 

a) Lanabecestat (Alzheimer’s disease)

 

During the period, the Company and Eli Lilly and Company (Lilly) announced the discontinuation of the global Phase III clinical trials of lanabecestat, an oral beta secretase cleaving enzyme (BACE) inhibitor, for the treatment of Alzheimer’s disease. The decision was based on recommendations by an independent data monitoring committee (IDMC), which concluded that both the AMARANTH trial, in early Alzheimer’s disease and the DAYBREAK-ALZ trial, in dementia of mild Alzheimer’s disease, were unlikely to meet their primary endpoints upon completion and therefore should be stopped for futility. As a result of this decision, the related AMARANTH extension trial was also discontinued. The IDMC recommendation to stop the trials was not based on safety concerns. The Company and Lilly BACE alliance for lanabecestat remains in place and the companies are working with the clinical-trial sites involved to implement the discontinuations.

 

 

 

 

For more details on the development pipeline, including regulatory submission/acceptances,

please refer to the latest Clinical Trials Appendix available on astrazeneca.com

 

 

 

 

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Table of Contents

 

Condensed Consolidated Statement Of Comprehensive Income

 

For the half year ended 30 June

 

2018
$m

 

 

2017
$m

 

Product Sales

 

10,015

 

 

9,783

 

Externalisation Revenue

 

318

 

 

673

 

Total Revenue

 

10,333

 

 

10,456

 

Cost of sales

 

(2,146

)

 

(1,844

)

Gross profit

 

8,187

 

 

8,612

 

Distribution costs

 

(165

)

 

(149

)

Research and development expense

 

(2,641

)

 

(2,802

)

Selling, general and administrative costs

 

(5,008

)

 

(4,658

)

Other operating income & expense

 

1,086

 

 

839

 

Operating profit

 

1,459

 

 

1,842

 

Finance income

 

78

 

 

39

 

Finance expense

 

(718

)

 

(781

)

Share of after tax losses in associates and joint ventures

 

(33

)

 

(26

)

Profit before tax

 

786

 

 

1,074

 

Taxation

 

(151

)

 

(116

)

Profit for the period

 

635

 

 

958

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

Items that will not be reclassified to profit or loss

 

 

 

 

 

 

Remeasurement of the defined benefit pension liability

 

187

 

 

(271

)

Fair value movements on equity investments

 

156

 

 

 

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

 

(2

)

 

 

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

 

(67

)

 

71

 

 

 

274

 

 

(200

)

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

Foreign exchange arising on consolidation

 

(284

)

 

377

 

Foreign exchange arising on designating borrowings in net investment hedges

 

(516

)

 

383

 

Fair value movements on cash flow hedges

 

(16

)

 

127

 

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

 

69

 

 

(200

)

Fair value movements on derivatives designated in net investment hedges

 

(2

)

 

(35

)

Amortisation of loss on cash flow hedge

 

 

 

1

 

Fair value movements on equity investments

 

 

 

(94

)

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

 

55

 

 

(70

)

 

 

(694

)

 

489

 

Other comprehensive (loss)/income for the period, net of tax

 

(420

)

 

289

 

Total comprehensive income for the period

 

215

 

 

1,247

 

 

 

 

 

 

 

 

Profit attributable to:

 

 

 

 

 

 

Owners of the Parent

 

690

 

 

1,014

 

Non-controlling interests

 

(55

)

 

(56

)

 

 

635

 

 

958

 

 

 

 

 

 

 

 

Total comprehensive income attributable to:

 

 

 

 

 

 

Owners of the Parent

 

270

 

 

1,303

 

Non-controlling interests

 

(55

)

 

(56

)

 

 

215

 

 

1,247

 

 

 

 

 

 

 

 

Basic earnings per $0.25 Ordinary Share

 

$0.54

 

 

$0.80

 

Diluted earnings per $0.25 Ordinary Share

 

$0.54