REG - AstraZeneca PLC - AZN: 1st Quarter Results <Origin Href="QuoteRef">AZN.L</Origin> - Part 3
29/04/2016 07:06
- Part 3: For the preceding part double click ID:nRSc7470Wb
II Q1 2014
AZD4547 FGFR tyrosine kinase inhibitor solid tumours II Q4 2011
inebilizumab# (MEDI-551) CD19 mAb diffuse B-cell lymphoma II Q1 2012
MEDI-573# IGF mAb metastatic breast cancer II Q2 2012
AZD0156 ATM serine/threonine kinase inhibitor solid tumours I Q4 2015
AZD2811# Aurora B kinase inhibitor solid tumours I Q4 2015
AZD6738 ATR serine/threonine kinase inhibitor solid tumours I Q4 2013
AZD8186 PI3 kinase beta inhibitor solid tumours I Q2 2013
AZD9150# STAT3 inhibitor haematological malignancies I Q1 2012
AZD9496 selective oestrogen receptor downregulator (SERD) ER+ breast cancer I Q4 2014
MEDI0562# humanised OX40 agonist solid tumours I Q1 2015
MEDI-565# CEA BiTE mAb solid tumours I Q1 2011
MEDI0639# DLL-4 mAb solid tumours I Q2 2012
MEDI0680 PD-1 mAb solid tumours I Q4 2013
MEDI1873 GITR agonist fusion protein solid tumours I Q4 2015
MEDI3617# ANG-2 mAb solid tumours I Q4 2010
MEDI4276 HER2 bispecific ADC mAb solid tumours I Q4 2015
MEDI6383# OX40 agonist solid tumours I Q3 2014
MEDI9197# TLR 7/8 agonist solid tumours I Q4 2015
MEDI9447 CD73 mAb solid tumours I Q3 2015
Infection, Neuroscience and Gastrointestinal
CXL# beta lactamase inhibitor / cephalosporin methicillin-resistant S. aureus II Q4 2010
AZD3241 myeloperoxidase inhibitor multiple system atrophy II Q2 2015(Orphan Drug)
MEDI3902 Psl/PcrV bispecific mAb prevention of nosocomial pseudomonas pneumonia II Q2 2016(FDA Fast Track)
MEDI4893 mAb binding to S. aureus toxin hospital-acquired pneumonia / serious S. aureus infection II Q4 2014 (FDA Fast Track)
MEDI7510 RSV sF+GLA-SE prevention of RSV disease in older adults II Q3 2015
MEDI8852 influenza A mAb influenza A treatment II Q4 2015(FDA Fast Track)
MEDI8897# RSV mAb-YTE passive RSV prophylaxis II Q1 2015 (FDA Fast Track)
ATM AVI# monobactam/ beta lactamase inhibitor targeted serious bacterial infections I Q4 2012
AZD8108 NMDA antagonist suicidal ideation I Q4 2014
MEDI1814 amyloid beta mAb Alzheimer's disease I Q2 2014
MEDI7352 NGF/TNF bispecific mAb osteoarthritis pain I Q1 2016
Q2 2014
MEDI7352
NGF/TNF bispecific mAb
osteoarthritis pain
I
Q1 2016
1 MedImmune-sponsored trial in collaboration with Innate Pharma
2 MedImmune-sponsored trial in collaboration with Novartis AG
Significant Life-Cycle Management
Respiratory, Inflammation and Autoimmunity
SymbicortSYGMA ICS/LABA as-needed use in mild asthma Q4 2014 N/A 2018 2019
Symbicort ICS/LABA breath actuated Inhaler asthma/COPD 2018
Duaklir Genuair# LAMA/LABA COPD 2018 Launched 2018 2018
Cardiovascular and Metabolic Diseases
Brilinta/Brilique5 P2Y12 receptor antagonist outcomes trial in patients with prior myocardial infarction Q4 2010 Launched(Priority Review) Launched Accepted Accepted6
PEGASUS-
TIMI 54
Brilinta/Brilique5 EUCLID P2Y12 receptor antagonist outcomes trial in patients with peripheral artery disease Q4 2012 2017 2017 2017 2018
Brilinta/Brilique5 THEMIS P2Y12 receptor antagonist outcomes trial in patients with type-2 diabetes and CAD, but without a previous history of MI or stroke Q1 2014 2018 2018 2018 2019
Brilinta/Brilique5 HESTIA P2Y12 receptor antagonist prevention of vaso-occlusive crises in paediatric patients with sickle cell disease Q1 2014 2020 2020
Onglyza SAVOR-TIMI 53 DPP-4 inhibitor type-2 diabetes outcomes trial Q2 2010 Launched Launched H2 20161
Kombiglyze XR/Komboglyze2 DPP-4 inhibitor/ metformin FDC type-2 diabetes Launched Launched Submitted
Farxiga/Forxiga4 SGLT2 inhibitor type-2 diabetes outcomes trial Q2 2013 2020 2020
DECLARE-
TIMI 58
Farxiga/Forxiga4 SGLT2 inhibitor type-1 diabetes Q4 2014 2018 2017 2018
Xigduo XR/Xigduo3 SGLT2 inhibitor/ metformin FDC type-2 diabetes Launched Launched
saxagliptin/dapagliflozin FDC DPP-4 inhibitor/ SGLT2 inhibitor FDC type-2 diabetes Q2 2012 Accepted Accepted
Bydureon weekly GLP-1 receptor agonist type-2 diabetes Q1 2013 2017 2017
suspension
Bydureon EXSCEL GLP-1 receptor agonist type-2 diabetes outcomes trial Q2 2010 2018 2018 2018
EpanovaSTRENGTH omega-3 carboxylic acids outcomes trial in statin-treated patients at high CV risk, with persistent hypertriglyceridemia plus low HDL-cholesterol Q4 2014 2020 2020 2020 2020
Epanova/Farxiga/Forxiga4 omega-3 carboxylic acids/ SGLT2 inhibitor non-alcoholic fatty liver disease/non-alcoholic steatohepatitis (NASH) Q1 2015
Oncology
FaslodexFALCON oestrogen receptor antagonist 1st-line hormone receptor +ve advanced breast cancer Q4 2012 H2 2016 H2 2016 H2 2016 2020
Lynparza (olaparib) GOLD PARP inhibitor 2nd-line gastric cancer Q3 2013 2017 2017
Lynparza (olaparib) OlympiAD PARP inhibitor gBRCA metastatic breast cancer Q2 2014 2017 2017 2017
Lynparza (olaparib) SOLO-2 PARP inhibitor 2nd-line or greater BRCAm PSR ovarian cancer, maintenance monotherapy Q3 2013 2017 2017 2017
Lynparza (olaparib) SOLO-1 PARP inhibitor 1st-line BRCAm ovarian cancer Q3 2013 2017 2017 2017
Lynparza (olaparib) SOLO-3 PARP inhibitor gBRCA PSR ovarian cancer Q1 2015 2018
Lynparza (olaparib) POLO PARP inhibitor pancreatic cancer Q1 2015 2018 2018 2018
Lynparza (olaparib) PARP inhibitor prostate cancer Q3 2014 (Breakthrough Therapy Designation)7
Lynparza (olaparib) OlympiA PARP inhibitor gBRCA adjuvant breast cancer Q2 2014 2020 2020 2020
Tagrisso FLAURA EGFR tyrosine kinase inhibitor 1st-line advanced EGFRm NSCLC Q1 2015 2017 2017 2017 2017
Tagrisso ADAURA EGFR tyrosine kinase inhibitor adjuvant EGFRm NSCLC Q4 2015 2022 2022 2022 2022
Infection, Neuroscience and Gastrointestinal
Nexium proton pump inhibitor stress ulcer prophylaxis H2 2016
Nexium proton pump inhibitor paediatrics Launched Launched H2 2016 Accepted
Diprivan# sedative and anaesthetic conscious sedation N/A Launched Accepted Launched
linaclotide# GC-C receptor peptide agonist irritable bowel syndrome with constipation N/A N/A N/A Accepted
(IBS-C)
irritable bowel syndrome with constipation
(IBS-C)
N/A
N/A
N/A
Accepted
1 Timing of China submission dependent on US regulatory approval
2 Kombiglyze XR in the US; Komboglyze in the EU
3 Xigduo XR in the US; Xigduo in the EU
4 Farxiga in the US; Forxiga in rest of world
5 Brilinta in the US; Brilique in rest of world
6 Submission accepted 11 April 2016
7 Breakthrough Therapy designation granted for prostate cancer patients with BRCA1/2 or ATM gene mutated mCRPC who have
received previous taxane-based chemotherapy and one newer hormonal agent (abiraterone or enzalutamide).
Terminations (discontinued projects between 1 January and 31 March 2016)
NME / Line Extension Compound Reason for Discontinuation Area Under Investigation
LCM inebilizumab# (MEDI-551) + rituximab Safety/efficacy haematological malignancies
NME AZD5312# Safety/efficacy solid tumours
NME AZD8835 Safety/efficacy solid tumour
NME tremelimumab¶DETERMINE Safety/efficacy mesothelioma 2nd/3rd line
LCM Tagrisso + durvalumabCAURAL Safety/efficacy ≥2nd-line advanced EGFRm T790M NSCLC
NME abrilumab# Strategic Crohn's disease / ulcerative colitis
NME AZD8999 Strategic COPD
LCM Brilinta/Brilique5 SOCRATES Safety/efficacy outcomes trial in patients with stroke or TIA
Condensed Consolidated Statement of Comprehensive Income
Product sales 5,565 5,748
Externalisation revenue 550 309
Total revenue 6,115 6,057
Cost of sales (1,004) (1,269)
Gross profit 5,111 4,788
Distribution costs (76) (77)
Research and development expense (1,480) (1,356)
Selling, general and administrative costs (2,572) (2,799)
Other operating income and expense 55 377
Operating profit 1,038 933
Finance income 14 11
Finance expense (325) (261)
Share of after tax losses in associates and joint ventures (4) (5)
Profit before tax 723 678
Taxation (98) (126)
Profit for the period 625 552
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurement of the defined benefit pension liability (191) (17)
Tax on items that will not be reclassified to profit or loss 41 4
(150) (13)
Items that may be reclassified subsequently to profit or loss
Foreign exchange arising on consolidation (167) (449)
Foreign exchange arising on designating borrowings in net investment hedges 207 (408)
Fair value movements on derivatives designated in net investment hedges (32) 21
Net available for sale (losses)/gains taken to equity (29) 19
Tax on items that may be reclassified subsequently to profit or loss 10 100
(11) (717)
Other comprehensive income for the period, net of tax (161) (730)
Total comprehensive income for the period 464 (178)
Profit attributable to:
Owners of the Parent 646 550
Non-controlling interests (21) 2
625 552
Total comprehensive income attributable to:
Owners of the Parent 485 (179)
Non-controlling interests (21) 1
464 (178)
Basic earnings per $0.25 Ordinary Share $0.51 $0.44
Diluted earnings per $0.25 Ordinary Share $0.51 $0.44
Weighted average number of Ordinary Shares in issue (millions) 1,264 1,263
Diluted weighted average number of Ordinary Shares in issue (millions) 1,265 1,265
Basic earnings per $0.25 Ordinary Share
$0.51
$0.44
Diluted earnings per $0.25 Ordinary Share
$0.51
$0.44
Weighted average number of Ordinary Shares in issue (millions)
1,264
1,263
Diluted weighted average number of Ordinary Shares in issue (millions)
1,265
1,265
Condensed Consolidated Statement of Financial Position
ASSETS Non-current assets
Property, plant and equipment 6,560 6,413 5,913
Goodwill 11,988 11,868 11,387
Intangible assets 29,627 22,646 20,319
Derivative financial instruments 419 446 491
Investments in associates and joint ventures 104 85 52
Other investments 500 458 490
Other receivables 874 907 977
Deferred tax assets 1,482 1,294 1,381
51,554 44,117 41,010
Current assets
Inventories 2,344 2,143 1,968
Trade and other receivables 5,866 6,622 6,704
Other investments 671 613 493
Derivative financial instruments 8 2 37
Income tax receivable 452 387 297
Cash and cash equivalents 3,428 6,240 3,192
12,769 16,007 12,691
Total assets 64,323 60,124 53,701
LIABILITIES Current liabilities
Interest-bearing loans and borrowings (2,168) (916) (2,299)
Trade and other payables (11,174) (11,663) (10,510)
Derivative financial instruments (4) (9) (17)
Provisions (790) (798) (602)
Income tax payable (1,796) (1,483) (2,330)
(15,932) (14,869) (15,758)
Non-current liabilities
Interest-bearing loans and borrowings (14,144) (14,137) (8,270)
Derivative financial instruments - (1) -
Deferred tax liabilities (4,420) (2,733) (1,611)
Retirement benefit obligations (2,099) (1,974) (2,506)
Provisions (461) (444) (424)
Other payables (10,625) (7,457) (8,176)
(31,749) (26,746) (20,987)
Total liabilities (47,681) (41,615) (36,745)
Net assets 16,642 18,509 16,956
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital 316 316 316
Share premium account 4,322 4,304 4,276
Other reserves 2,028 2,036 2,039
Retained earnings 8,075 11,834 10,305
14,741 18,490 16,936
Non-controlling interests 1,901 19 20
Total equity 16,642 18,509 16,956
Non-controlling interests
1,901
19
20
Total equity
16,642
18,509
16,956
Condensed Consolidated Statement of Cash Flows
Cash flows from operating activities
Profit before tax 723 678
Finance income and expense 311 250
Share of after tax losses in associates and joint ventures 4 5
Depreciation, amortisation and impairment 569 849
Decrease/(increase) in working capital and short-term provisions 64 (664)
Non-cash and other movements (88) (703)
Cash generated from operations 1,583 415
Interest paid (185) (242)
Tax paid (205) (245)
Net cash inflow/(outflow) from operating activities 1,193 (72)
Cash flows from investing activities
Movement in short-term investments and fixed deposits 33 276
Purchase of property, plant and equipment (267) (227)
Disposal of property, plant and equipment 2 8
Purchase of intangible assets (39) (848)
Disposal of intangible assets - 325
Purchase of non-current asset investments (68) (23)
Disposal of non-current asset investments - 37
Upfront payments on business acquisitions (2,564) -
Payment of contingent consideration on business acquisitions (26) (144)
Interest received 42 40
Net cash outflow from investing activities (2,887) (556)
Net cash outflow before financing activities (1,694) (628)
Cash flows from financing activities
Proceeds from issue of share capital 18 15
Repayment of loans - (884)
Dividends paid (2,409) (2,357)
Hedge contracts relating to dividend payments 5 (43)
Repayment of obligations under finance leases (3) (10)
Movement in short-term borrowings 1,028 710
Net cash outflow from financing activities (1,361) (2,569)
Net decrease in cash and cash equivalents in the period (3,055) (3,197)
Cash and cash equivalents at the beginning of the period 6,051 6,164
Exchange rate effects 43 (19)
Cash and cash equivalents at the end of the period 3,039 2,948
Cash and cash equivalents consists of:
Cash and cash equivalents 3,428 3,192
Overdrafts (389) (244)
3,039 2,948
(389)
(244)
3,039
2,948
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 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
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 2016 316 4,304 2,036 11,834 18,490 19 18,509
Profit for the period - - - 646 646 (21) 625
Other comprehensive income - - - (161) (161) - (161)
Transfer to other reserves - - (8) 8 - - -
Transactions with owners:
Dividends - - - (2,402) (2,402) - (2,402)
Acerta put option - - - (1,825) (1,825) - (1,825)
Changes in non-controlling interest - - - - - 1,903 1,903
Issue of Ordinary Shares - 18 - - 18 - 18
Share-based payments - - - (25) (25) - (25)
Net movement - 18 (8) (3,759) (3,749) 1,882 (1,867)
At 31 Mar 2016 316 4,322 2,028 8,075 14,741 1,901 16,642
* Other reserves include 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 2016 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. 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 2015.
Legal proceedings
The information contained in Note 6 updates the disclosures concerning legal proceedings and contingent liabilities in the
Group's Annual Report and Form 20-F Information 2015.
Going concern
The Group has considerable financial resources available. As at 31 March 2016 the Group has $4.2bn in financial resources
(cash balances of $3.4bn and undrawn committed bank facilities of $3bn which are available until April 2021, with only
$2.2bn 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.
Financial information
The comparative figures for the financial year ended 31 December 2015 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 2016 is stated after charging restructuring costs of $155m ($213m for the
first quarter of 2015). These have been charged to profit as follows:
Q1 2016 Q1 2015
$m $m
Cost of sales 9 43
Research and development expense 38 62
Selling, general and administrative costs 108 108
Total 155 213
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 2016 $m Cash Flow$m Acquisitions$m Non-cash& Other$m Exchange Movements$m At 31 Mar 2016 $m
Loans due after one year (14,109) - - (6) (15) (14,130)
Finance leases due after one year (28) - - 14 - (14)
Total long-term debt (14,137) - - 8 (15) (14,144)
Current instalments of finance leases (67) 3 - (26) (1) (91)
Total current debt (67) 3 - (26) (1) (91)
Other investments 613 (29) 140 (1) (13) 710
Net derivative financial instruments 438 30 - (45) - 423
Cash and cash equivalents 6,240 (2,852) - - 40 3,428
Overdrafts (189) (203) - - 3 (389)
Short-term borrowings (660) (1,028) - - - (1,688)
6,442 (4,082) 140 (46) 30 2,484
Net debt (7,762) (4,079) 140 (64) 14 (11,751)
Non-cash movements in the period include fair value adjustments under IAS 39.
4 MAJORITY EQUITY INVESTMENT IN ACERTA PHARMA
On 2 February 2016, AstraZeneca completed an agreement to invest in a majority equity stake in Acerta Pharma, a
privately-owned biopharmaceutical company based in the Netherlands and US. The transaction provides AstraZeneca with a
potential best-in-class irreversible oral Bruton's tyrosine kinase (BTK) inhibitor, acalabrutinib (ACP-196), currently in
Phase III development for B-cell blood cancers and in Phase I/II clinical trials in multiple solid tumours.
Under the terms of the agreement, AstraZeneca has acquired 55% of the issued share capital of Acerta for an upfront payment
of $2.5bn. A further payment of $1.5bn will be paid either on receipt of the first regulatory approval for acalabrutinib
for any indication in the US, or the end of 2018, depending on which is first. The agreement also includes options which,
if exercised, provide the opportunity for Acerta shareholders to sell, and AstraZeneca to buy, the remaining 45% of shares
in Acerta. The options can be exercised at various points in time, conditional on the first approval of acalabrutinib in
both the US and Europe and when the extent of the commercial opportunity has been fully established, at a price of
approximately $3bn net of certain costs and payments incurred by AstraZeneca and net of agreed future adjusting items,
using a pre-agreed pricing mechanism. Acerta has approximately 150 employees.
AstraZeneca's 55% holding is a controlling interest and Acerta's combination of intangible product rights with an
established workforce and their operating processes requires that the transaction is accounted for as a business
combination in accordance with IFRS 3.
Goodwill is principally attributable to the value of the specialist knowhow inherent in the acquired workforce and the
accounting for deferred taxes. Goodwill is not expected to be deductible for tax purposes. Acerta Pharma's results have
been consolidated into the Group's results from 2 February 2016. From the period from acquisition to 31 March 2016, Acerta
Pharma had no revenues and its loss after tax was $49 million.
Given the proximity of the completion of the transaction to the date of the Interim Financial Statements, the finalisation
of the accounting entries for this transaction has yet to be completed. Our provisional assessment of the fair values of
the assets and liabilities acquired is detailed below. Our assessment will be completed in 2016.
Fair value$m
Intangible assets 7,307
Other assets including cash and cash equivalents 238
Deferred tax liabilities (1,827)
Other liabilities (90)
Total net assets acquired 5,628
Non-controlling interests (1,903)
Goodwill 84
Fair value of total consideration 3,809
Less: fair value of deferred consideration (1,332)
Total upfront consideration 2,477
Less: cash and cash equivalents acquired (94)
Net cash outflow 2,383
5 FINANCIAL INSTRUMENTS
As detailed in the Group's 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 for financial instruments, including fair value measurement, from those disclosed on pages 146 and 147
of the Company's Annual Report and Form 20-F Information 2015. 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 $1,171m of other investments, $1,756m of loans, and $423m of derivatives as at 31 March 2016. The total fair value
of interest-bearing loans and borrowings at 31 March 2016, which have a carrying value of $16,312m in the Condensed
Consolidated Statement of Financial Position, was $17,724m. Contingent consideration liabilities arising on business
combinations have been classified under Level 3 in the fair value hierarchy and movements in fair value are shown below:
DiabetesAlliance2016 Other 2016 Total 2016 Total 2015
$m $m $m $m
At 1 January 5,092 1,319 6,411 6,899
Settlements (26) - (26) (144)
Revaluations - - - (9)
Discount unwind 97 27 124 132
Foreign exchange - - - (3)
At 31 March 5,163 1,346 6,509 6,875
6 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 2015 (the 2015 Disclosures). Unless noted otherwise below or in the 2015 Disclosures, no
provisions have been established in respect of the claims discussed below.
As discussed in the 2015 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 2015 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 2016 and to 29 April 2016.
Patent litigation
Crestor (rosuvastatin)
US patent proceedings
As previously disclosed, AstraZeneca is defending three patent infringement lawsuits in the US District Court for the
District of South Carolina (the District Court) which, among other things, claim that AstraZeneca's Crestor sales induce
infringement of the plaintiffs' patents. In December 2015, the District Court issued an order dismissing the first of these
cases, filed by Palmetto Pharmaceuticals, LLC (Palmetto), and entered judgment in AstraZeneca's favour, which Palmetto is
appealing. In February 2016, the District Court granted AstraZeneca's motions for summary judgment and dismissed the
remaining two, consolidated cases filed by co-plaintiffs Medical University of South Carolina Foundation for Research
Development and Charleston Medical Therapeutics (together CMT) and entered judgment in AstraZeneca's favour, which CMT has
appealed.
Patent proceedings outside the US
As previously disclosed, in Australia, AstraZeneca was unsuccessful in defending the validity of certain Crestor patents,
at trial and on appeal. This patent litigation concluded in September 2015. A provision has been taken in respect of claims
from generic entities which were prevented by court order from launching their products in Australia before AstraZeneca's
patents were subsequently found invalid. In April 2016, AstraZeneca was notified that the Commonwealth of Australia also
intends to pursue a claim against AstraZeneca in relation to alleged losses it suffered in connection with this patent
litigation. AstraZeneca will respond appropriately in due course.
As previously disclosed, in the Netherlands, in April 2014, AstraZeneca received a writ of summons from Resolution
Chemicals Ltd. (Resolution) alleging partial invalidity and non-infringement of the supplementary protection certificate
(SPC) related to the Crestor substance patent. In July 2015, the District Court of the Hague determined that the SPC does
not extend to zinc salts of rosuvastatin and that Resolution's rosuvastatin zinc product does not infringe the SPC.
AstraZeneca appealed. In February 2016, the Court of Appeal of the Hague overturned the decision and found that
Resolution's product does infringe the SPC. Resolution may seek to appeal.
Faslodex (fulvestrant)
US patent proceedings
As previously disclosed, AstraZeneca has filed patent infringement lawsuits in the US District Court in New Jersey relating
to four patents listed in the FDA Orange Book with reference to Faslodex, after AstraZeneca received seven Paragraph IV
notices relating to six ANDAs seeking FDA approval to market generic versions of Faslodex prior to the expiration of
AstraZeneca's patents. The first trial, against the first three ANDA filers, is scheduled to commence on 27 June 2016.
Patent proceedings outside the US
As previously disclosed, in September 2015, AstraZeneca filed a request for a provisional injunction against Hexal AG
(Hexal) in the Regional Court of Düsseldorf after Hexal threatened to launch a generic Faslodex product in Germany. The
request was denied in November 2015 and AstraZeneca appealed. In February 2016, the Higher Regional Court of Düsseldorf
ruled in AstraZeneca's favour and ordered the provisional injunction against Hexal.
Movantik/Moventig (naloxegol)
US patent proceedings
As previously disclosed, in 2015, Neptune Generics LLC, filed a petition seeking inter partes review (IPR) with the US
Patent Office challenging the validity of an FDA Orange Book listed patent relating to Movantik (US Patent No. 7,786,133).
In April 2016, the US Patent Trial and Appeal Board denied the petition.
Patent proceedings outside the US
As previously disclosed, in Europe, Generics UK Ltd. (trading as Mylan) filed an opposition to the grant of European Patent
No. 1,694,363 with the European Patent Office (EPO). In February 2016, the Opposition Division of the EPO upheld the patent
as granted and dismissed the opposition.
Onglyza (saxagliptin) and Kombiglyze (saxagliptin and metformin)
US patent proceedings
As previously disclosed, following the denial of Mylan Pharmaceuticals, Inc.'s (Mylan) motion to dismiss for lack of
jurisdiction by the US District Court for the District of Delaware (the District Court), Mylan appealed that decision. In
March 2016, the US Court of Appeals for the Federal Circuit affirmed the District Court's decision (the March Decision). In
April 2016, Mylan filed a petition for rehearing en banc of the March Decision.
Nexium (esomeprazole magnesium)
US patent proceedings
In February 2016, AstraZeneca received a Paragraph IV notice from MacLeods Pharmaceuticals Ltd. (MacLeods) challenging
certain patents listed in the FDA Orange Book with reference to Nexium. MacLeods submitted an ANDA seeking to market
esomeprazole magnesium. In March 2016, in response to MacLeods' notice, AstraZeneca filed a patent infringement lawsuit
against MacLeods in the US District Court for the District of New Jersey. The litigation is at an early stage and no trial
date has been set.
In March 2016, AstraZeneca received a Paragraph IV notice from Hetero USA Inc. (Hetero) challenging certain patents listed
in the FDA Orange Book with reference to Nexium24HR (OTC). Hetero submitted an ANDA seeking to market OTC esomeprazole
magnesium. AstraZeneca is reviewing Hetero's notice.
Patent Proceedings outside the US
As previously disclosed, in Canada, in July 2014, the Federal Court found Canadian Patent No. 2,139,653 invalid and not
infringed by Apotex Inc. In July 2015, AstraZeneca's appeal was dismissed. On 10 March 2016, the Supreme Court of Canada
granted AstraZeneca leave to appeal. A tentative hearing date is set for 8 November 2016.
Product liability litigation
Onglyza (saxagliptin)
As previously disclosed, Amylin Pharmaceuticals, LLC, a wholly owned subsidiary of AstraZeneca, and/or AstraZeneca are
among multiple defendants in various lawsuits filed
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