REG - AstraZeneca PLC - 1st Quarter Results <Origin Href="QuoteRef">AZN.L</Origin> - Part 2
15/07/2015 14:30
- Part 2: For the preceding part double click ID:nRSX2049La
initiatives include a focus
on sales and marketing effectiveness, including the leveraging of marketing programmes on a global basis. Other programmes
are focused on delivering savings across procurement and support functions, including IT and further footprint
optimisation.
Other Operating Income
Core Other Operating Income reached $426m in the quarter primarily reflecting gains on disposals including Myalept ($193m)
and other disposals amounting to $109m, including the US rights to Tenormin.
Profit
Core Operating Profit was down 4% to $1,805m. Core Operating Margin was down 1.4 percentage points to 29.8% of Total
Revenue as the Company continued to invest in the pipeline and the growth platforms. Core Earnings Per Share were down 3%
to $1.08, a marginally favourable performance versus Core Operating Profit. Reported Operating Profit of $933m was 15%
higher than the first quarter of 2014. Reported EPS was up by 10% at $0.44.
Productivity
Restructuring charges of $213m were taken in the quarter. The Company continues to make good progress in implementing the
fourth phase of restructuring announced in the first quarter of 2013 and the expansion of this programme announced in the
first half of 2014. In addition to costs of this programme, the restructuring charge for the quarter included $53m incurred
as a consequence of the decision to exit the Westborough site in the US and costs of other initiatives identified since the
announcement of the fourth wave of restructuring. The Company also began construction of its new Global R&D Centre and
Corporate Headquarters on the Cambridge Biomedical Campus in the quarter.
Finance Income and Expense
Core net finance expense was $118m versus $126m in the first quarter of 2014. Reported net finance expense of $250m
included a charge of $132m relating to the discount unwind on contingent consideration creditors recognised on business
combinations, principally relating to the acquisition of BMS's share of the global diabetes alliance last year.
Taxation
Both the Reported and Core tax rates for the quarter ended 31 March 2015 were around 19%. The cash tax paid for the quarter
was $245m which is 36% of Reported Profit Before Tax and 15% of Core Profit Before Tax. The Reported and Core tax rates for
the quarter ended 31 March 2014 were 21% and 19% respectively.
Cash Flow
The Company generated a cash outflow from operating activities of $72m in the quarter, compared with an inflow of $1,187m
in the first quarter of 2014. Net cash outflows from investing activities were $556m compared with $3,777m in the first
quarter of 2014, mainly reflecting higher upfront payments on business acquisitions in the first quarter of 2014. Net cash
distributions to shareholders were $2,342m through dividends of $2,357m, offset by proceeds from the issue of shares of
$15m due to the exercise of stock options.
Debt and Capital Structure
At 31 March 2015, outstanding gross debt (interest-bearing loans and borrowings) was $10,569m (31 March 2014: $10,340m). Of
the gross debt outstanding at 31 March 2015, $2,299m was due within one year (31 March 2014: $2,787m).
The Company's net debt position at 31 March 2015 was $6,373m (31 March 2014: $4,833m).
Shares in Issue
During the quarter, 0.4 million shares were issued in respect of share option exercises for a consideration of $15m. The
total number of shares in issue at 31 March 2015 was 1,264 million.
Guidance
The Company reiterates the guidance provided on 6 March 2015:
- FY 2015 Total Revenue is expected to decline by mid single-digit percent at CER
- Core EPS is expected to increase by low single-digit percent at CER
The Company also provides the following non-guidance information related to currency sensitivity:
- Based on current exchange rates1, Total Revenue is expected to decline by low double-digit percent
- Core EPS is expected to be broadly in line with FY 2014. For additional currency sensitivity information, please see
below:
Average Exchange Rates Versus USD Impact Of 5% Weakening In Exchange Rate Versus USD ($m)2
Currency Primary Relevance 2014 YTDMarch 20151 Change% Total Revenue Core Operating Profit
EUR Product Sales 0.75 0.89 (15) (225) (138)
JPY Product Sales 105.87 119.15 (11) (119) (84)
CNY Product Sales 6.16 6.24 (1) (115) (49)
SEK Costs 6.86 8.32 (18) (6) 114
GBP Costs 0.61 0.66 (8) (37) 112
Other3 (242) (139)
1Based on average daily spot rates YTD to the end of March 2015
2Based on 2014 actual average exchange rates and group currency exposures
3Other important currencies include AUD, BRL, CAD, KRW and RUB
Condensed Consolidated Statement of Comprehensive Income
For the quarter ended 31 March 2015$m Restated 2014$m
Product sales 5,748 6,416
Externalisation revenue 309 44
Total revenue 6,057 6,460
Cost of sales (1,269) (1,453)
Gross profit 4,788 5,007
Distribution costs (77) (72)
Research and development expense (1,356) (1,200)
Selling, general and administrative expense (2,799) (2,726)
Other operating income and expense 377 (173)
Operating profit 933 836
Finance income 11 15
Finance expense (261) (213)
Share of after tax losses of joint ventures (5) -
Profit before tax 678 638
Taxation (126) (132)
Profit for the period 552 506
Other Comprehensive Income
Items that will not be reclassified to profit or loss
Remeasurement of the defined benefit pension liability (17) (25)
Tax on items that will not be reclassified to profit or loss 4 6
(13) (19)
Items that may be reclassified subsequently to profit or loss
Foreign exchange arising on consolidation (449) 55
Foreign exchange arising on designating borrowings in net investment hedges (408) (1)
Fair value movements on derivatives designated in net investment hedges 21 (9)
Net available for sale gains taken to equity 19 2
Tax on items that may be reclassified subsequently to profit or loss 100 (7)
(717) 40
Other comprehensive income for the period, net of tax (730) 21
Total comprehensive income for the period (178) 527
Profit attributable to:
Owners of the Parent 550 504
Non-controlling interests 2 2
552 506
Total comprehensive income attributable to:
Owners of the Parent (179) 531
Non-controlling interests 1 (4)
(178) 527
Basic earnings per $0.25 Ordinary Share $0.44 $0.40
Diluted earnings per $0.25 Ordinary Share $0.44 $0.40
Weighted average number of Ordinary Shares in issue (millions) 1,263 1,260
Diluted weighted average number of Ordinary Shares in issue (millions) 1,265 1,262
Basic earnings per $0.25 Ordinary Share
$0.44
$0.40
Diluted earnings per $0.25 Ordinary Share
$0.44
$0.40
Weighted average number of Ordinary Shares in issue (millions)
1,263
1,260
Diluted weighted average number of Ordinary Shares in issue (millions)
1,265
1,262
Condensed Consolidated Statement of Financial Position
At 31 Mar 2015$m At 31 Dec 2014$m At 31 Mar 2014$m
ASSETS Non-current assets
Property, plant and equipment 5,913 6,010 6,173
Goodwill 11,387 11,550 11,601
Intangible assets 20,319 20,981 21,532
Derivative financial instruments 491 465 352
Investments in joint ventures 52 59 -
Other investments 490 502 297
Other receivables 977 1,112 1,430
Deferred tax assets 1,381 1,219 1,463
41,010 41,898 42,848
Current assets
Inventories 1,968 1,960 2,163
Trade and other receivables 6,704 7,232 8,579
Other investments 493 795 777
Derivative financial instruments 37 21 8
Income tax receivable 297 329 636
Cash and cash equivalents 3,192 6,360 4,379
12,691 16,697 16,542
Total assets 53,701 58,595 59,390
LIABILITIES Current liabilities
Interest-bearing loans and borrowings (2,299) (2,446) (2,787)
Trade and other payables (10,510) (11,886) (10,626)
Derivative financial instruments (17) (21) (8)
Provisions (602) (623) (776)
Income tax payable (2,330) (2,354) (3,316)
(15,758) (17,330) (17,513)
Non-current liabilities
Interest-bearing loans and borrowings (8,270) (8,397) (7,553)
Derivative financial instruments - - (1)
Deferred tax liabilities (1,611) (1,796) (2,760)
Retirement benefit obligations (2,506) (2,951) (2,357)
Provisions (424) (484) (586)
Other payables (8,176) (7,991) (7,143)
(20,987) (21,619) (20,400)
Total liabilities (36,745) (38,949) (37,913)
Net assets 16,956 19,646 21,477
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital 316 316 316
Share premium account 4,276 4,261 4,179
Other reserves 2,039 2,021 1,967
Retained earnings 10,305 13,029 14,992
16,936 19,627 21,454
Non-controlling interests 20 19 23
Total equity 16,956 19,646 21,477
20
19
23
Total equity
16,956
19,646
21,477
Condensed Consolidated Statement of Cash Flows
For the quarter ended31 March 2015$m 2014 $m
Cash flows from operating activities
Profit before tax 678 638
Finance income and expense 250 198
Share of after tax losses of joint ventures 5 -
Depreciation, amortisation and impairment 849 712
(Increase)/decrease in working capital and short-term provisions (664) 30
Non-cash and other movements (703) 207
Cash generated from operations 415 1,785
Interest paid (242) (231)
Tax paid (245) (367)
Net cash (outflow)/inflow from operating activities (72) 1,187
Cash flows from investing activities
Movement in short-term investments and fixed deposits 276 36
Purchase of property, plant and equipment (227) (183)
Disposal of property, plant and equipment 8 57
Purchase of intangible assets (848) (545)
Disposal of intangible assets 325 -
Purchase of non-current asset investments (23) (2)
Disposal of non-current asset investments 37 -
Upfront payments on business acquisitions - (2,778)
Payment of contingent consideration on business acquisitions (144) (290)
Interest received 40 30
Payments made by subsidiaries to non-controlling interests - (102)
Net cash outflow from investing activities (556) (3,777)
Net cash outflow before financing activities (628) (2,590)
Cash flows from financing activities
Proceeds from issue of share capital 15 197
Repayment of loans (884) -
Dividends paid (2,357) (2,425)
Hedge contracts relating to dividend payments (43) 25
Repayment of obligations under finance leases (10) (9)
Movement in short-term borrowings 710 -
Net cash outflow from financing activities (2,569) (2,212)
Net decrease in cash and cash equivalents in the period (3,197) (4,802)
Cash and cash equivalents at the beginning of the period 6,164 8,995
Exchange rate effects (19) (5)
Cash and cash equivalents at the end of the period 2,948 4,188
Cash and cash equivalents consists of:
Cash and cash equivalents 3,192 4,379
Overdrafts (244) (191)
2,948 4,188
2,948
4,188
Condensed Consolidated Statement of Changes in Equity
Share Share Other Retained Total Non- Total
capital premium reserves* earnings $m controlling equity
$m account $m $m interests $m
$m $m
At 1 Jan 2014 315 3,983 1,966 16,960 23,224 29 23,253
Profit for the period - - - 504 504 2 506
Other comprehensive income - - - 27 27 (6) 21
Transfer to other reserves - - 1 (1) - - -
Transactions with owners:
Dividends - - - (2,395) (2,395) - (2,395)
Issue of Ordinary Shares 1 196 - - 197 - 197
Share-based payments - - - (103) (103) - (103)
Transfer from non-controlling interests to payables - - - - - (2) (2)
Net movement 1 196 1 (1,968) (1,770) (6) (1,776)
At 31 Mar 2014 316 4,179 1,967 14,992 21,454 23 21,477
Share Share Other Retained Total Non- Total
capital premium reserves* earnings $m controlling equity
$m account $m $m interests $m
$m $m
At 1 Jan 2015 316 4,261 2,021 13,029 19,627 19 19,646
Profit for the period - - - 550 550 2 552
Other comprehensive income - - - (729) (729) (1) (730)
Transfer to other reserves - - 18 (18) - - -
Transactions with owners:
Dividends - - - (2,400) (2,400) - (2,400)
Issue of Ordinary Shares - 15 - - 15 - 15
Share-based payments - - - (127) (127) - (127)
Net movement - 15 18 (2,724) (2,691) 1 (2,690)
At 31 Mar 2015 316 4,276 2,039 10,305 16,936 20 16,956
* Other reserves includes the capital redemption reserve and the merger reserve.
Notes to the Interim Financial Statements
1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
These unaudited condensed consolidated interim financial statements ("interim financial statements") for the quarter ended
31 March 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union
(EU) and as issued by the International Accounting Standards Board (IASB).
The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the EU and as issued by the IASB. Except as detailed below, the interim financial statements have
been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's
published consolidated financial statements for the year ended 31 December 2014.
As announced on 6 March 2015, the Group updated its revenue accounting policy with effect from 1 January 2015. The Group's
business model now includes an increasing level of externalisation activity to create value from the strong science that
exists in the pipeline. Historically, reported revenue reflected only product sales, with externalisation revenue forming
part of other operating income presented below gross profit. From 1 January 2015 externalisation revenue, alongside product
sales, are included in total revenue. Externalisation revenue includes development, commercialisation, partnership and
out-licence revenue, such as royalties and milestone receipts, together with income from services or repeatable licences.
Income is recorded as externalisation revenue when the Group has a significant ongoing interest in the product and/or it is
repeatable business and there is no derecognition of an intangible asset. Disposals of assets and businesses, where the
Group does not retain an interest, will continue to be recorded in other operating income. The updated financial
presentation reflects the Group's entrepreneurial approach and provides a clearer picture of this additional revenue
stream. The updated revenue accounting policy results in a presentational change to the Statement of Comprehensive Income
only, and has no impact on the Group's net results or net assets. The prior period Condensed Consolidated Statement of
Comprehensive Income has been restated accordingly, resulting in $44m of income being reclassified from other operating
income to externalisation revenue for the quarter ended 31 March 2014.
The Group has adopted the amendments to IAS 19 Employee Contributions, issued by IASB in November 2013 and effective for
periods beginning on or after 1 July 2014. The adoption has not had a significant impact on the Group's profit for the
period, net assets or cash flows. There have been no other significant new or revised accounting standards applied in the
quarter ended 31 March 2015.
The information contained in Note 5 updates the disclosures concerning legal proceedings and contingent liabilities in the
Group's Annual Report and Form 20-F Information 2014.
The Group has considerable financial resources available. As at 31 March 2015 the Group has $3.9bn in financial resources
(cash balances of $3.2bn and undrawn committed bank facilities of $3.0bn which are available until April 2020, with only
$2.3bn of debt due within one year). The Group's revenues are largely derived from sales of products which are covered by
patents which provide a relatively high level of resilience and predictability to cash inflows, although our revenue is
expected to continue to be significantly impacted by the expiry of patents over the medium term. In addition, government
price interventions in response to budgetary constraints are expected to continue to adversely affect revenues in many of
our mature markets. However, we anticipate new revenue streams from both recently launched medicines and products in
development, and the Group has a wide diversity of customers and suppliers across different geographic areas. Consequently,
the Directors believe that, overall, the Group is well placed to manage its business risks successfully.
On the basis of the above paragraph and after making enquiries, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly,
the interim financial statements have been prepared on a going concern basis.
The comparative figures for the financial year ended 31 December 2014 are not the Company's statutory accounts for that
financial year. Those accounts have been reported on by the Group's auditors and will be delivered to the registrar of
companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under
section 498(2) or (3) of the Companies Act 2006.
2 restructuring costs
Profit before tax for the quarter ended 31 March 2015 is stated after charging restructuring costs of $213m ($479m for the
first quarter 2014). These have been charged to profit as follows:
Q1 2015 Q1 2014
$m $m
Cost of sales 43 11
Research and development expense 62 85
Selling, general and administrative costs 108 91
Other operating income and expense - 292
Total 213 479
479
3 Net DEBT
The table below provides an analysis of net debt and a reconciliation of net cash flow to the movement in net debt.
At 1 Jan 2015 $m Cash Flow $m Non-cash Movements$m Exchange Movements$m At 31 Mar 2015 $m
Loans due after one year (8,337) - (3) 125 (8,215)
Finance leases due after one year (60) - 3 2 (55)
Total long-term debt (8,397) - - 127 (8,270)
Current instalments of loans (912) 884 - 28 -
Current instalments of finance leases (48) 10 (20) 2 (56)
Total current debt (960) 894 (20) 30 (56)
Other investments - current 795 (289) 23 (36) 493
Net derivative financial instruments 465 56 (10) - 511
Cash and cash equivalents 6,360 (3,145) - (23) 3,192
Overdrafts (196) (52) - 4 (244)
Short-term borrowings (1,290) (710) 1 - (1,999)
6,134 (4,140) 14 (55) 1,953
Net debt (3,223) (3,246) (6) 102 (6,373)
Non-cash movements in the period include fair value adjustments under IAS 39.
4 FINANCIAL INSTRUMENTS
As detailed in our most recent annual financial statements, our principal financial instruments consist of derivative
financial instruments, other investments, trade and other receivables, cash and cash equivalents, trade and other payables,
and interest-bearing loans and borrowings. As indicated in Note 1, there have been no changes to the accounting policies,
including fair value measurement, for financial instruments from those disclosed on pages 140 and 141 of the Company's
Annual Report and Form 20-F Information 2014. In addition, there have been no changes of significance to the categorisation
or fair value hierarchy of our financial instruments. Financial instruments measured at fair value include $983m of other
investments, $1,199m of loans, and $511m of derivatives as at 31 March 2015. The total fair value of interest-bearing loans
and borrowings at 31 March 2015, which have a carrying value of $10,569m in the Condensed Consolidated Statement of
Financial Position, was $12,039m. Contingent consideration liabilities arising on the Company's acquisitions of business
combinations have been classified under Level 3 in the fair value hierarchy and movements in fair value are shown below:
DiabetesAlliance2015 Other 2015 Total 2015 Total 2014
$m $m $m $m
At 1 January 5,386 1,513 6,899 514
Additions through business combinations - - - 5,249*
Settlements (9) (135) (144) (290)
Revaluations - (9) (9) -
Discount unwind 104 28 132 72
Foreign exchange - (3) (3) -
At 31 March 5,481 1,394 6,875 5,545
*The preliminary estimate of the fair value of contingent consideration of $5,249m was subsequently revised, in the third
quarter of 2014, to $5,169m.
5 legal proceedings and contingent liabilities
AstraZeneca is involved in various legal proceedings considered typical to its business, including litigation and
investigations relating to product liability, commercial disputes, infringement of intellectual property rights, the
validity of certain patents, anti-trust law and sales and marketing practices. The matters discussed below constitute the
more significant developments since publication of the disclosures concerning legal proceedings in the Company's Annual
Report and Form 20-F Information 2014 (the 2014 Disclosures). Unless noted otherwise below or in the 2014 Disclosures, no
provisions have been established in respect of the claims discussed below.
As discussed in the 2014 Disclosures, for the majority of claims in which AstraZeneca is involved it is not possible to
make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of the
proceedings. In these cases, AstraZeneca discloses information with respect only to the nature and facts of the cases but
no provision is made.
In cases that have been settled or adjudicated, or where quantifiable fines and penalties have been assessed and which are
not subject to appeal, or where a loss is probable and we are able to make a reasonable estimate of the loss, we record the
loss absorbed or make a provision for our best estimate of the expected loss.
The position could change over time and the estimates that we have made and upon which we have relied in calculating these
provisions are inherently imprecise. There can, therefore, be no assurance that any losses that result from the outcome of
any legal proceedings will not exceed the amount of the provisions that have been booked in the accounts. The major factors
causing this uncertainty are described more fully in the 2014 Disclosures and herein.
AstraZeneca has full confidence in, and will vigorously defend and enforce, its intellectual property.
Matters disclosed in respect of the first quarter of 2015 and to 24 April 2015.
Patent litigation
Crestor (rosuvastatin)
Patent proceedings outside the US
As previously disclosed, in Australia, in 2011 and 2012, AstraZeneca instituted proceedings against Actavis Australia Pty
Ltd, Apotex Pty Ltd and Watson Pharma Pty Ltd asserting infringement of three formulation and method patents for Crestor.
In March 2013, the Federal Court of Australia held all three patents at issue invalid. AstraZeneca appealed in relation to
two patents. In August 2014, the Full Court of the Federal Court of Australia held the two patents invalid. In March 2015,
the High Court granted AstraZeneca leave to appeal in relation to one method patent.
Daliresp (roflumilast)
Patent proceedings in the US
In April 2015, AstraZeneca received several Paragraph IV Notices challenging certain patents listed in the FDA Orange Book
with reference to Daliresp. AstraZeneca is reviewing the Notices.
Faslodex (fulvestrant)
Patent proceedings outside the US
In March 2015, AstraZeneca was served with a writ of summons by which Actavis Group PTC ehf. and Actavis Italy S.p.A
(together, Actavis) commenced invalidity and non-infringement proceedings before a court in Turin, Italy relating to two
Faslodex formulation patents, European Patent EP 1250138 and Italian Patent IT 1333490.
Losec/Prilosec (omeprazole)
Patent Proceedings in the US
As previously disclosed, in 2008, Apotex Inc. (Apotex) was found to infringe AstraZeneca's US Patent Nos. 4,786,505 and
4,853,230. In 2013, the US District Court for the Southern District of New York ordered Apotex to pay $76m in damages with
an additional sum of $28m in pre-judgment interest, and an unspecified amount of post-judgment interest. Apotex appealed.
In April 2015, the US Court of Appeals for the Federal Circuit affirmed the bulk of the damages award, with the exception
of a small portion of the award which related to sales post patent expiration during a portion of the paediatric
exclusivity period.
Patent Proceedings outside the US
As previously disclosed, in Canada, in 2004, AstraZeneca brought proceedings against Apotex Inc. (Apotex) for infringement
of several patents related to Losec. In February 2015, the Federal Court of Canada found that Apotex had infringed
AstraZeneca's Canadian Patent No. 1,292,693. Apotex have appealed.
Pulmicort Respules (budesonide inhalation suspension)
Patent proceedings in the US
As previously disclosed, in October 2014, the US District Court for the District of New Jersey (the District Court) held a
trial on the merits in respect of US Patent No. 7,524,834 (the '834 Patent) and to determine whether AstraZeneca's request
for permanent injunctive relief against Breath Limited, Apotex, Inc. and Apotex Corp., Sandoz, Inc. and Watson
Laboratories, Inc. (together, the Generic Challengers) should be granted. On 13 February 2015, the District Court
determined that the '834 Patent is invalid and denied the injunction request. Also on 13 February 2015, AstraZeneca filed a
motion for an injunction pending an appeal of the District Court's decision, which was denied on the same day. On 16
February 2015, AstraZeneca appealed the District Court's decision to the US Court of Appeals for the Federal Circuit (the
Court of Appeals) and filed an Emergency Motion for an Injunction Pending Appeal. On 17 February 2015, the Court of Appeals
issued an injunction against the Generic Challengers pending submissions by the parties. On 12 March 2015, the Court of
Appeals issued an injunction pending appeal. Oral argument in the appeal is scheduled for 4 May 2015.
Seroquel XR (quetiapine fumarate)
Patent proceedings in the US
As previously disclosed, in October and November 2014, AstraZeneca filed patent infringement proceedings against Pharmadax,
Inc. and Pharmadax USA, Inc. (together, Pharmadax) in the US District Court for the District of New Jersey. In February
2015, AstraZeneca settled the patent infringement litigation by granting Pharmadax a licence to the Seroquel XR product
patent effective from 1 November 2016, or earlier in certain circumstances.
In February 2015, AstraZeneca received a Paragraph IV Notice from AB Pharmaceuticals, LLC, the US agent of Macleods
Pharmaceuticals, Ltd., (together, Macleods) alleging that the patent listed in the FDA Orange Book with reference to
Seroquel XR is invalid, unenforceable and/or is not infringed by Macleods' proposed generic product. Macleods submitted an
Abbreviated New Drug Application (ANDA) seeking to market quetiapine fumarate tablets. In February 2015, AstraZeneca filed
a patent infringement lawsuit against Macleods and Macleods Pharma USA, Inc. in the US District Court for the District of
New Jersey.
Patent proceeding outside the US
As previously reported, in March 2013, the Federal Court of Canada dismissed AstraZeneca's application to prohibit the
Canadian Minister of Health from issuing a notice of compliance to Teva Canada Limited (Teva) for its generic quetiapine
fumarate product relating to Seroquel XR. Teva subsequently launched its generic Seroquel XR at risk and filed an action
seeking section 8 damages arising from these proceedings. In April 2015, AstraZeneca and Teva entered into a settlement
agreement ending the ongoing patent litigation between the parties, as well as the section 8 damages action, and allowing
Teva to continue selling generic Seroquel XR.
Vimovo(esomeprazole magnesium/naproxen)
Patent proceedings outside the US
In Canada, in January 2015, AstraZeneca received two Notices of Allegation from Mylan Pharmaceuticals ULC. In response,
AstraZeneca and Pozen Inc. (the licensee and patent holder, respectively), commenced proceedings in relation to Canadian
Patent No. 2,449,098.
Commercial litigation
Seroquel IR (quetiapine fumarate)
As previously disclosed, with regard to insurance coverage for the substantial legal defence costs and settlements that
have been incurred in connection with the Seroquel IR product liability claims in the US, related to alleged diabetes
and/or other related alleged injuries (which now exceed the total amount of insurance coverage available), an arbitration
is ongoing against an insurer in respect of the availability of coverage under an insurance policy. The policy has a
coverage limit of $50m. AstraZeneca has not recognised an insurance receivable in respect of this legal action.
Synagis (palivizumab)
As previously disclosed, in September 2011, MedImmune filed an action against AbbVie, Inc. (AbbVie) (formerly Abbott
International, LLC) in the Circuit Court for Montgomery County, Maryland, seeking a declaratory judgment in a contract
dispute. AbbVie's motion to dismiss was granted. In September 2011, AbbVie filed a parallel action against MedImmune in the
Illinois State Court, where the case is currently pending. A trial date has been set for 31 August 2015.
Toprol-XL(metoprolol succinate)
On 30 March 2015, AstraZeneca was served with a state court complaint filed by the Attorney General for the State of
Louisiana alleging that, in connection with enforcement of its patents for Toprol-XL, it had engaged in unlawful
monopolisation and unfair trade practices, causing the state government to pay increased prices for Toprol-XL. The
complaint is very similar to prior class action complaints filed by private parties against AstraZeneca relating to
Toprol-XL in 2006 and resolved by settlement in 2012. The State seeks an unspecified amount of trebled damages and
pre-judgment interest. AstraZeneca denies these allegations.
6 product Sales analysis
World US Europe Established ROW Emerging Markets
Q1 2015$m CER% Q1 2015$m CER Q1 2015$m CER% Q1 2015$m CER% Q1 2015$m CER%
%
Respiratory, Inflammation and Autoimmunity:
Symbicort 845 - 342 (1) 306 (8) 99 (3) 98 40
Pulmicort 286 17 52 - 38 - 20 (8) 176 33
Tudorza/Eklira 30 n/m 10 n/m 18 n/m 2 n/m - n/m
Others 82 16 12 - 27 21 3 (50) 40 29
Total Respiratory, Inflammation and Autoimmunity 1,243 7 416 2 389 (2) 124 (5) 314 35
Cardiovascular and Metabolic disease:
Brilinta/Brilique 131 45 46 64 54 21 8 33 23 108
Onglyza 183 19 98 (8) 37 72 14 36 34 85
Bydureon 123 58 106 54 16 100 1 - - -
Byetta 90 19 68 31 15 - 4 (20) 3 -
Farxiga/Forxiga 76 n/m 37 n/m 24 n/m 3 n/m 12 n/m
Legacy:
Crestor 1,167 (7) 614 (13) 243 (5) 132 (3) 178 12
Seloken/Toprol-XL 194 8 27 13 25 (3) 3 (40) 139 12
Atacand 95 (9) 11 - 30 (29) 7 (36) 47 14
Others 171 (3) 20 18 39 (13) 15 (16) 97 2
Total Cardiovascular and Metabolic Disease 2,230 5 1,027 1 483 4 187 (3) 533 18
Oncology:
Iressa 144 (5) - - 35 (5) 32 (28) 77 9
Lynparza 9 n/m 8 n/m 1 n/m - n/m - n/m
Legacy:
Zoladex 194 3 6 - 44 (12) 62 (7) 82 23
Faslodex 161 2 83 9 49 (8) 12 (7) 17 11
Casodex 70 (6) - n/m 8 (18) 32 (14) 30 14
Arimidex 62 (12) 3 (40) 13 (29) 19 (22) 27 20
Others 34 26 6 - 8 13 13 67 7 13
Total Oncology 674 1 106 13 158 (10) 170 (12) 240 16
Infection, Neuroscience and Gastrointestinal:
Nexium 644 (25) 225 (53) 74 (6) 128 (3) 217 15
Synagis 204 (38) 162 (37) 42 (42) - - - -
Seroquel XR 262 (6) 169 2 63 (22) 7 (42) 23 17
Losec/Prilosec 96 (4) 7 (13) 26 (9) 19 (19) 44 10
FluMist/Fluenz 7 - 7 40 - - - - - -
Others 388 (5) 50 (33) 105 (7) 71 18 162 -
Total Infection, Neuroscience and Gastrointestinal 1,601 (19) 620 (37) 310 (16) 225 (1) 446 9
TOTAL PRODUCT SALES 5,748 (3) 2,169 (14) 1,340 (5) 706 (5) 1,533 18
ASTRAZENECA DEVELOPMENT PIPELINE, 31 MARCH 2015
Phase III / Pivotal Phase II / Registration
NMEs and significant additional indications
Submission dates shown for assets in Phase III and beyond. As disclosure of compound information is balanced by the
business need to maintain confidentiality, information in relation to some compounds listed here has not been disclosed at
this time.
Compound Mechanism Area Under Investigation Date Commenced Phase Estimated Filing
US EU Japan China
Cardiovascular and Metabolic Disease
Brilinta/Brilique1 ADP receptor antagonist arterial thrombosis Launched Launched Filed Launched
Epanova# omega-3 free fatty acids hypertriglyceridaemia Approved 2017 2019
Farxiga/Forxiga2 SGLT-2 inhibitor type 2 diabetes Launched Launched Launched Filed
roxadustat# hypoxia-inducible factor prolyl hydroxylase inhibitor anaemia in CKD / ESRD Q3 2014 2018 N/A N/A H2 2016
Oncology
AZD9291 EGFR tyrosine kinase inhibitor ≥2L advanced EGFRm T790M NSCLC Q2 2014 Q2 2015 Q2 2015 Q3 2015 2017
AZD9291 EGFR tyrosine kinase inhibitor 1L advanced EGFRm NSCLC Q1 2015 2017 2017 2017 2020
Caprelsa VEGFR / EGFR tyrosine kinase inhibitor with RET kinase activity medullary thyroid cancer Launched Launched Filed Filed
cediranibICON 6 VEGF inhibitor PSR ovarian cancer Q2 2015
MEDI4736#PACIFIC anti-PD-L1 MAb stage III NSCLC Q2 2014 2017 2020 2020
MEDI4736# anti-PD-L1 MAb 3rd line NSCLC Q1 2014 H1 2016 2017 2017
ATLANTIC¶
MEDI4736# anti-PD-L1 MAb 2nd line SCCHN Q1 2015 H2 2016 H2 2016 H2 2016
HAWK¶
moxetumomab pasudotox# anti-CD22 recombinant hairy cell leukaemia Q2 2013 2018 2018
immunotoxin
selumetinib# MEK inhibitor 2nd line KRAS+ NSCLC Q4 2013 2017 2017
SELECT-1
selumetinib# MEK inhibitor differentiated thyroid cancer Q3 2013 2017 2017
ASTRA
selumetinib# MEK inhibitor uveal melanoma Q2 2014 Q4 2015 Q4 2015
SUMIT
tremelimumab¶ anti-CTLA-4 MAb mesothelioma Q2 2014 H1 2016 H2 2016
Phase III / Pivotal Phase II / Registration (continued)
Compound Mechanism Area Under Investigation Date Commenced Phase Estimated Filing
US EU Japan China
Respiratory, Inflammation and Autoimmunity
benralizumab#CALIMA SIROCCO ZONDA BISE BORA anti-IL-5R MAb severe asthma Q4 2013 H2 2016 H2 2016
benralizumab#TERRANOVA GALATHEA anti-IL-5R MAb
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