REG - AstraZeneca PLC - AZN: Full-Year 2017 Results <Origin Href="QuoteRef">AZN.L</Origin> - Part 2
02/02/2018 07:10
- Part 2: For the preceding part double click ID:nRSB7444Da
$405m in the year (FY 2016: $254m). Brilinta sales grew by 46% in the US to $509m. The New CVMD Growth Platform
increased sales by 5% in the US to $1,942m, reflecting strong performances from Farxiga and Brilinta.
Europe
Product Sales of $4,753m; a decline of 6% (7% at CER).
The New Oncology Growth Platform in Europe grew by 102% (99% at CER) to $317m, partly driven by Tagrisso sales of $187m.
Lynparza sales of $130m represented growth of 60% (58% at CER). Forxiga sales growth of 29% (28% at CER) to $242m was
accompanied by Brilique growth of 14% (13% at CER) to $295m. These performances were more than offset by declines in other
areas, however, including a 10% decline in Symbicort sales to $819m. Symbicort maintained its position, however, as the
number one ICS/LABA medicine, despite competition from branded and analogue medicines. Crestor sales declined by 23% to
$666m, reflecting the entry of generic medicines in certain markets in the year.
Established ROW
Product Sales of $3,081m; stable (up 1% at CER).
Japan sales increased by 1% (4% at CER) to $2,208m. EGFR T790M-mutation testing rates in Japan continued to exceed 90%
through the year, with full-year Tagrisso sales of $219m (FY 2016: $82m) reflecting a high penetration rate in the
currently-approved 2nd-line setting. Faslodex sales in Japan were favourably impacted by a new label in the year; Faslodex
sales in Japan increased by 14% (17% at CER) to $72m.
The first generic competitor to Crestor was launched in Japan in Q3 2017 and further generic competition entered the market
in the final quarter. Full-year Crestor sales in Japan declined by 6% (4% at CER) to $489m; in the quarter, they declined
by 26% (21% at CER) to $95m. Nexium sales in Japan increased by 1% (4% at CER) in the year to $439m and sales of Forxiga
increased by 89% (93% at CER) in the year to $53m.
Financial Performance
________________________________________________________________________________________
Reported
FY 2017 FY 2016 Actual CER
$m $m % change
Total Revenue 22,465 23,002 (2) (2)
Product Sales 20,152 21,319 (5) (5)
Externalisation Revenue 2,313 1,683 37 38
Cost of Sales (4,318) (4,126) 5 7
\
Gross Profit 18,147 18,876 (4) (4)
Gross Margin* 79.6% 80.8% -1 -1
Distribution Expense (310) (326) (5) (3)
% Total Revenue 1.4% 1.4% - -
R&D Expense (5,757) (5,890) (2) (1)
% Total Revenue 25.6% 25.6% - -
SG&A Expense (10,233) (9,413) 9 10
% Total Revenue 45.5% 40.9% -5 -5
Other Operating Income and Expense 1,830 1,655 11 11
% Total Revenue 8.1% 7.2% +1 +1
Operating Profit 3,677 4,902 (25) (28)
% Total Revenue 16.4% 21.3% -5 -6
Net Finance Expense (1,395) (1,317) 6 (4)
Joint Ventures and Associates (55) (33) 66 66
Profit Before Tax 2,227 3,552 (37) (38)
Taxation 641 (146)
Tax Rate (29)% 4%
Profit After Tax 2,868 3,406 (16) (16)
Earnings Per Share $2.37 $2.77 (14) (15)
*Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product
Sales.
FY 2017 Cost of Sales included $198m of costs relating to externalisation activities, which is excluded from the
calculation of Gross Margin (FY 2016: $32m). Movements in Gross Margin are expressed in percentage points.
Reported
Q4 2017 Q4 2016 Actual CER
$m $m % change
Total Revenue 5,777 5,585 3 2
Product Sales 5,487 5,260 4 3
Externalisation Revenue 290 325 (11) (12)
Cost of Sales (1,225) (1,160) 6 2
\
Gross Profit 4,552 4,425 3 2
Gross Margin* 77.6% 77.9% - -
Distribution Expense (85) (83) 3 -
% Total Revenue 1.5% 1.5% - -
R&D Expense (1,551) (1,543) - (2)
% Total Revenue 26.8% 27.6% +1 +1
SG&A Expense (3,078) (1,386) n/m n/m
% Total Revenue 53.3% 24.8% -28 -28
Other Operating Income and Expense 848 1,120 (24) (25)
% Total Revenue 14.7% 20.1% -5 -5
Operating Profit 686 2,533 (73) (71)
% Total Revenue 11.9% 45.4% -33 -32
Net Finance Expense (267) (339) (21) (27)
Joint Ventures and Associates (12) (11) 19 19
Profit Before Tax 407 2,183 (81) (78)
Taxation 854 (366)
Tax Rate (210)% 17%
Profit After Tax 1,261 1,817 (31) (25)
Earnings Per Share $1.03 $1.46 (29) (24)
*Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product
Sales.
Q4 2017 Cost of Sales included $2m of income relating to externalisation activities (Q4 2016: $nil), which is excluded from
the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.
Reconciliation of Reported Profit Before Tax to EBITDA
FY 2017 Q4 2017
$m % change $m % change
Actual CER Actual CER
Reported Profit Before Tax 2,227 (37) (38) 407 (81) (78)
Net Finance Expense 1,395 6 (4) 267 (21) (27)
Joint Ventures and Associates 55 66 66 12 19 19
Depreciation, Amortisation and Impairment 3,036 29 29 1,107 88 81
EBITDA* 6,713 (8) (10) 1,793 (43) (42)
*EBITDA is a non-GAAP financial measure. See the Operating and Financial Review for a definition of EBITDA.
Reconciliation of Reported to Core Financial Measures
FY 2017 Reported Restructuring Intangible AssetAmortisation & Impairments Diabetes Alliance Other1 Core2 Core
Actual CER
$m $m $m $m $m $m % change
Gross Profit 18,147 181 149 - - 18,477 (3) (3)
Gross Margin3 79.6% - - - - 81.2% -1 -1
Distribution Expense (310) - - - - (310) (5) (3)
R&D Expense (5,757) 201 144 - - (5,412) (4) (3)
SG&A Expense (10,233) 347 1,469 641 (77) (7,853) (4) (3)
Other Operating Income and Expense 1,830 78 45 - - 1,953 14 14
Operating Profit 3,677 807 1,807 641 (77) 6,855 2 -
% Total Revenue 16.4% - - - - 30.5% +1 +1
Net Finance Expense (1,395) - - 313 432 (650) (2) (4)
Taxation 641 (169) (453) (198) (681) (860) 31 23
Earnings Per Share $2.37 $0.50 $1.07 $0.60 $(0.26) $4.28 (1) (2)
1Other adjustments include fair value adjustments relating to contingent consideration on business combinations (see Note
4), discount unwind on acquisition-related liabilities (see Note 4), provision charges related to certain legal matters
(see Note 5), foreign-exchange gains and losses relating to the classification of certain non-structural intra-group loans
and a one-off adjustment of $617m reflecting adjustments to deferred taxes in line with the recently reduced US federal
income tax rate.
2Each 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.
3Gross Margin, as a percentage of Product Sales, reflects gross profit derived from Product Sales, divided by Product
Sales. FY 2017 Cost of Sales included $198m of costs relating to externalisation activities (FY 2016: $32m), which is
excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.
Q4 2017 Reported Restructuring Intangible AssetAmortisation & Impairments Diabetes Alliance Other1 Core2 Core
Actual CER
$m $m $m $m $m $m % change
Gross Profit 4,552 53 46 - - 4,651 3 3
Gross Margin3 77.6% - - - - 79.4% - +1
Distribution Expense (85) - - - - (85) 3 -
R&D Expense (1,551) 24 71 - - (1,456) (2) (4)
SG&A Expense (3,078) 82 696 406 (281) (2,175) 6 5
Other Operating Income and Expense 848 3 1 - - 852 (25) (26)
Operating Profit 686 162 814 406 (281) 1,787 (12) (11)
% Total Revenue 11.9% - - - - 30.9% -5 -5
Net Finance Expense (267) - - 79 64 (124) (28) (31)
Taxation 854 (34) (213) (54) (595) (42) (87) (100)
Earnings Per Share $1.03 $0.10 $0.48 $0.34 $(0.65) $1.30 7 13
1Other adjustments include fair value adjustments relating to contingent consideration on business combinations (see Note
4), discount unwind on acquisition-related liabilities (see Note 4), provision charges related to certain legal matters
(see Note 5), foreign-exchange gains and losses relating to the classification of certain non-structural intra-group loans
and a one-off adjustment of $617m reflecting adjustments to deferred taxes in line with the recently reduced US federal
income tax rate.
2Each 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.
3Gross Margin, as a percentage of Product Sales, reflects gross profit derived from Product Sales, divided by Product
Sales. Q4 2017 Cost of Sales included $2m of income relating to externalisation activities (Q4 2016: $nil), which is
excluded from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.
Profit and Loss Commentary for the Year
Gross Profit
Reported Gross Profit declined by 4% to $18,147m; Core Gross Profit declined by 3% to $18,477m, one percentage point more
than the Total Revenue decline. Externalisation Revenue of $2,313m included $1,247m received as part of the Lynparza and
selumetinib collaboration with MSD. This was outweighed by the adverse impact of product mix, the ramp-up of manufacturing
capacity for new medicines and the inclusion of the profit-share on the aforementioned collaboration.
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 one percentage point to 79.6%. The Core
Gross Margin declined by one percentage point to 81.2%. The declines were primarily driven by the effect of losses of
exclusivity on higher-margin Crestor and Seroquel XR, as well as the factors mentioned above.
In the quarter, the Reported Gross Margin was stable at 77.6%; the Core Gross Margin was stable (increased by one
percentage point at CER) to 79.4%.
Operating Expenses: R&D
Reported R&D costs declined by 2% (1% at CER) to $5,757m, with the Company continuing to focus on resource prioritisation
and cost discipline. Core R&D costs declined by 4% (3% at CER) to $5,412m. The movement vs. the prior year was in line with
commitments made in February 2017.
Operating Expenses: SG&A
Reported SG&A costs increased by 9% (10% at CER) to $10,233m in the year and by 122% (119% at CER) to $3,078m in the
quarter. This reflected the impact of fair-value adjustments to contingent consideration on business combinations in the
comparative period and, to a lesser extent, impairment charges recorded in the quarter.
Core SG&A costs declined by 4% (3% at CER) to $7,853m. This was in line with commitments made in February 2017 and despite
strategic investment in new launches.
Core SG&A costs in the quarter increased by 6% (5% at CER) to $2,175m. This reflected the aforementioned increased
investment, including in medical-affairs capability and capacity in order to support the launches and early-stage
commercialisation phases of specialty-care medicines such as Tagrisso, Imfinzi, Lynparza and Fasenra. SG&A general
infrastructure costs declined in the quarter as the Company maintained its focus on cost discipline. The Company booked a
one-time gain of $92m in the quarter following adjustments to its retirement benefit plans in the US.
In the year, the Company continued to consolidate its operations that support the business. It is committed to driving
simplification and standardisation through targeted centralisation of back and middle office activities that are currently
performed in various enabling units, including Finance, Compliance, HR, Procurement and IT. As a result, underlying
operational-infrastructure costs were consistently reduced, in line with prior trends. The recently-launched Global
Business Services organisation provides integration of governance, locations and business practices to shared services and
outsourcing activities across AstraZeneca.
Other Operating Income and Expense
Where AstraZeneca does not retain a significant ongoing interest in medicines or potential new medicines, income from
disposal transactions is reported within Other Operating Income and Expense in the Company's financial statements. Reported
Other Operating Income and Expense increased by 11% in the year to $1,830m and included:
· $555m resulting from the sale of remaining rights to the anaesthetics portfolio to Aspen
· $301m resulting from the sale of rights to Seloken in Europe to Recordati S.p.A (Recordati)
· $175m of milestone receipts in relation to the disposal of Zavicefta to Pfizer Inc.
· $165m resulting from the sale of the global rights to Zomig outside Japan to the Grünenthal Group (Grünenthal)
· $161m of gains recognised on the sale of short-term investments
· $73m from the sale of Prilosec royalty streams
· Other gains on disposal of intangible assets
Core Other Operating Income and Expense increased by 14% to $1,953m, with the difference to Reported Other Operating Income
and Expense primarily driven by a restructuring charge taken against land and buildings.
Operating Profit
Reported Operating Profit declined by 25% (28% at CER) in the year to $3,677m. In the quarter, Reported Operating Profit
declined by 73% (71% at CER) to $686m, driven by higher Other Operating Income and Expense in Q4 2016. The Reported
Operating Profit margin declined by five percentage points (six percentage points at CER) to 16% of Total Revenue. Core
Operating Profit increased by 2% (stable at CER) to $6,855m. The Core Operating Profit margin increased by one percentage
point to 31% of Total Revenue.
Brexit Planning
Following the UK referendum outcome of a decision for the UK to leave the European Union (EU) in June 2016, the progress of
current negotiations between the UK Government and the EU will likely determine the future terms of the UK's relationship
with the EU, as well as to what extent the UK will be able to continue to benefit from the EU's single market and its
regulatory frameworks.
In response to this, the Company has taken the decision to implement certain actions to mitigate the potential risk of
disruption to the supply of medicines including but not limited to duplication of release testing and procedures for
products based in the EU27 and the UK, transfer of regulatory licenses, customs and duties set up for introduction or
amendment of existing tariffs or processes and associated IT systems upgrades. The costs associated with this and certain
other actions directly related to Brexit will be charged as restructuring with the majority of such costs expected to be
cash costs. However, until the Brexit negotiation process is completed, it is difficult to anticipate the overall potential
impact on AstraZeneca's operations and hence the final expected costs to be incurred.
Net Finance Expense
Reported Net Finance Expense increased by 6% in the year to $1,395m, primarily reflecting a foreign-exchange impact
relating to the classification of certain non-structural intra-group loans. Reported Net Finance Expense declined by 4% at
CER, reflecting reduced levels of discount unwind on acquisition-related liabilities resulting from the diabetes alliance
with Bristol-Myers Squibb Company (BMS). Excluding the discount unwind on acquisition-related liabilities and the adverse
foreign-exchange impact, the Core Net Finance Expense declined by 2% (4% at CER) to $650m.
Profit Before Tax
Reported Profit Before Tax declined by 37% (38% at CER) to $2,227m, reflecting the lower Reported Gross Margin and an
increase in Reported SG&A costs. EBITDA declined by 8% (10% at CER) to $6,713m.
Taxation
The Reported Tax Rate of (29)% in the year benefitted from a favourable net adjustment of $617m to deferred taxes,
reflecting the recently reduced US federal income tax rate and non-taxable remeasurements of acquisition-related
liabilities. Additionally, there was a $321m benefit in the final quarter to the Reported and Core Tax Rates, reflecting:
· reductions in tax provisions and provision to return adjustments, reflecting:
- the expiry of statute of limitations
- favourable progress of discussions with tax authorities
· the recognition of previously unrecognised tax losses
· the favourable impact of UK Patent box profits
The Core Tax Rate for the year was 14%. Excluding these benefits, both the Reported and Core Tax Rates would have been 22%.
The net cash tax paid for the year was $454m, representing 20% of Reported Profit Before Tax.
The Reported and Core Tax Rates for the comparative period were 4% and 11% respectively. These rates included a one-off
benefit of $453m following agreements between the Canadian tax authority and the UK and Swedish tax authorities in respect
of transfer pricing arrangements for the period from 2004-2016. Excluding this effect, the Reported and Core Tax Rates for
the comparative period were 17% and 18% respectively. The cash tax paid for the comparative period was $412m, which was 12%
of Reported Profit Before Tax.
Earnings Per Share (EPS)
Reported EPS of $2.37 represented a decline of 14% (15% at CER) in the year. The performance was driven by a decline in
Total Revenue and increased SG&A costs, partly offset by the aforementioned net tax benefit, continued progress on R&D cost
control and an increase in Other Operating Income and Expense. Core EPS declined by 1% (2% at CER) to $4.28.
Dividend Per Share and Dividend Commitment
The Board has declared a second interim dividend of $1.90 per share (133.6 pence, 14.97 SEK) bringing the dividend per
share for the full year to $2.80 (202.5 pence, 22.37 SEK). The Board reaffirms its commitment to the Company's progressive
dividend policy.
For holders of the Company's American Depositary Shares (ADSs), the $1.90 per Ordinary Share equates to $0.95 per ADS. Two
ADSs equal one Ordinary Share.
Cash Flow and Balance Sheet
Cash Flow
FY 2017 FY 2016 Difference
$m $m $m
Reported operating profit 3,677 4,902 (1,225)
Depreciation, amortisation and impairment 3,036 2,357 679
(Increase)/decrease in working capital and short-term provisions (50) 926 (976)
(Gains)/losses on disposal of intangible assets (1,518) (1,301) (217)
Fair value movement on contingent consideration arising from business combinations 109 (1,158) 1,267
Non-cash and other movements (524) (492) (32)
Interest paid (698) (677) (21)
Tax paid (454) (412) (42)
Net cash inflow from operating activities 3,578 4,145 (567)
The Company generated a net cash inflow from operating activities of $3,578m in the year, compared with $4,145m in FY 2016.
In Q3 2017, the Company received an upfront cash receipt of $1.6bn from the global strategic oncology collaboration with
MSD, $997m of which was recorded in Operating Profit, with the remainder deferred to the balance sheet.
Net cash outflows from investing activities were $2,328m in the year compared with $3,969m in FY 2016. In the final
quarter, $1.5bn was paid to shareholders of Acerta Pharma B.V. (Acerta Pharma), a contractual obligation triggered by the
first regulatory approval for Calquence. The prior-period outflow included an upfront payment as part of the majority
investment in Acerta Pharma. The cash payment of contingent consideration in respect of the BMS share of the global
Diabetes alliance amounted to $284m in the year, which included a $100m milestone payment in respect of Qtern and royalty
payments.
Net cash outflows from financing activities were $2,936m in the year compared to $1,324m in FY 2016, as the Company repaid
a loan falling due.
Capital Expenditure
Capital expenditure amounted to $1,326m in the year, which included investment in the new global headquarters in Cambridge,
UK, as well as strategic manufacturing capacity in the UK, the US, Sweden and China.
Debt and Capital Structure
Cash and cash equivalents 3,324 5,018
Other investments 1,300 898
Net derivatives 504 235
Cash, short-term investments and derivatives 5,128 6,151
Overdrafts and short-term borrowings (845) (451)
Finance leases (5) (93)
Current instalments of loans (1,397) (1,769)
Loans due after one year (15,560) (14,495)
Interest-bearing loans and borrowings (gross debt) (17,807) (16,808)
Net Debt (12,679) (10,657)
Net Debt
(12,679)
(10,657)
Capital Allocation
The Board's aim is to continue to strike a balance between the interests of the business, financial creditors and the
Company's shareholders. After providing for investment in the business, supporting the progressive dividend policy and
maintaining a strong, investment-grade credit rating, the Board will keep under review potential investment in immediately
earnings-accretive, value-enhancing opportunities.
Foreign-Exchange Rates
Sensitivity
The Company provides the following currency sensitivity information:
Average Exchange Rates vs. USD Impact Of 5% Strengthening in Exchange Rate vs. USD ($m)1
Currency Primary Relevance FY 2017 YTD 20182 % change Product Sales Core Operating Profit
EUR Product Sales 0.89 0.82 +8 +160 +93
JPY Product Sales 112.18 111.07 +1 +117 +82
CNY Product Sales 6.75 6.43 +5 +146 +75
SEK Costs 8.54 8.06 +6 +5 -44
GBP Costs 0.78 0.73 +7 +23 -46
Other3 +193 +97
1Based on 2017 results at 2017 actual exchange rates.
2Based on average daily spot rates between 1 January and 31 January 2018.
3Other important currencies include AUD, BRL, CAD, KRW and RUB.
Foreign-Exchange Hedging
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.
Corporate and Business Development Update
________________________________________________________________________________________
On 20 December 2017, it was announced by ANI Pharmaceuticals, Inc. that it had acquired the rights to market Atacand,
Arimidex and Casodex from AstraZeneca for $47m in cash upfront, recorded as Other Operating Income and Expense in the
Company's financial statements in the quarter. AstraZeneca will receive future royalties and sales-based milestones.
Research and Development Update
________________________________________________________________________________________
A comprehensive table comprising AstraZeneca's pipeline of medicines in human trials can be found later in this document.
Highlights of developments in the Company's late-stage pipeline since the prior results announcement are shown below:
Regulatory Approvals 7 - Faslodex - breast cancer (combinations) (US, EU)- Lynparza - ovarian cancer (JP) - Lynparza - breast cancer (US)- Fasenra - severe, uncontrolled
asthma (US, EU, JP)
Regulatory Submissions and/or Acceptances 4 - Tagrisso - lung cancer (1st line) (US - Priority Review, EU, JP)- ZS-9 - hyperkalaemia (US)
Major Phase IIIData Readouts and Developments 4 - Lynparza - ovarian cancer: Priority review (CN)- roxadustat - anaemia: Priority review (CN)- PT010 - COPD (KRONOS trial): Most primary endpoints met1-
tezepelumab - severe, uncontrolled asthma: First patient commenced dosing
New Molecular Entities 15 Oncology- Lynparza - multiple cancers2- Tagrisso - lung cancer2- Imfinzi - multiple cancers2- Calquence - blood cancers- Imfinzi + treme - multiple
(NMEs) in Phase III Trials or Under Regulatory Review and Major Lifecycle Medicines cancers- moxetumomab pasudotox - leukaemia- selumetinib - thyroid cancer- savolitinib - kidney cancer CVMD- ZS-9 (sodium zirconium cyclosilicate) -
hyperkalaemia2- roxadustat - anaemia2 Respiratory- Fasenra - COPD- PT010 - COPD, asthma- tezepelumab - severe, uncontrolled asthma Other- anifrolumab
- lupus- lanabecestat - Alzheimer's disease
Projects in Clinical Pipeline 132
1Eight of the nine primary endpoints in the KRONOS trial were met, including two non-inferiority endpoints to qualify
PT009, one of the comparators
2Under Regulatory Review. The table shown above as at today.
ONCOLOGY
AstraZeneca has a deep-rooted heritage in Oncology and offers a growing line of new medicines that has 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, Tagrisso, Imfinzi 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 New Oncology,
primarily focused on the treatment of lung, ovarian, breast and blood cancers, as one of AstraZeneca's Growth Platforms.
During the period, the Company presented Lynparza data at the San Antonio Breast Cancer annual symposium; highlights
included data from the MEDIOLA combination trial (Lynparza + Imfinzi) and the Asian-cohort data from the OlympiAD Lynparza
metastatic breast-cancer trial. The Company also presented data from the new and emerging haematology portfolio at the
American Society of Hematology (ASH) annual meeting; highlights included Calquence data in several cancer types, including
MCL and chronic lymphocytic leukaemia (CLL).
a) Faslodex (breast cancer)
On 13 November 2017, the Company announced that the European Medicines Agency (EMA) had approved a new indication for
Faslodex in Europe in combination with a CDK4/6 inhibitor, palbociclib, for the treatment of hormone receptor-positive
(HR+), human epidermal growth factor receptor 2 negative (HER2-), locally-advanced or metastatic breast cancer in patients
who have received prior endocrine therapy.
On 14 November 2017, the Company announced that the US FDA had approved a new indication for Faslodex, expanding the
indication to include use with abemaciclib, a CDK4/6 inhibitor, for the treatment of HR+, HER2- advanced or metastatic
breast cancer in patients with disease progression after endocrine therapy.
b) Lynparza (multiple cancers)
On 12 January 2018, the Company announced that the US FDA had approved
Lynparza
for use in patients with deleterious or suspected deleterious germline
BRCA (gBRCA)-mutated
HER2-negative metastatic breast cancer who have been previously treated with chemotherapy in the neoadjuvant, adjuvant or
metastatic setting. The approval was based on data from the randomised, open-label, Phase III OlympiAD trial, which
investigated
Lynparza
vs. physician's choice of chemotherapy (capecitabine, eribulin or vinorelbine). In the trial,
Lynparza
significantly prolonged progression-free survival (PFS) compared with chemotherapy and reduced the risk of disease
progression or death by 42% (Hazard Ratio (HR) 0.58; median PFS of 7.0 vs 4.2 months).
On 19 January 2018, AstraZeneca and MSD announced that the Japanese Ministry of Health, Labour and Welfare had approved
Lynparza tablets (300mg twice daily) for use in patients as a maintenance therapy for platinum-sensitive relapsed ovarian
cancer, regardless of their BRCA mutation status, who are in response to their last platinum-based chemotherapy. Lynparza
was the first PARP inhibitor to be approved in Japan. During the period, the Company also received priority review status
for Lynparza in platinum-sensitive relapsed ovarian cancer from the China FDA.
During the period, the Company presented an analysis of the comparison in endpoints from the Phase III trials of Lynparza
and niraparib in patients with platinum-sensitive, relapsed germline BRCA (gBRCA)-mutated ovarian cancer at the
International Society for PharmacoEconomics and Outcomes Research European Congress. Lynparza and niraparib are PARP
inhibitors.
A key summary of the efficacy and tolerability measures are detailed in the table below, which includes an
investigator-assessed 14.8 months of median PFS (mPFS) for niraparib in gBRCA patients:
Efficacy - platinum-sensitive, relapsed gBRCA-mutated ovarian cancer
PARP inhibitor Trial HR andmPFS(Independent Review Committee) HR andmPFS(Investigator Assessed) HR(median time to first subsequent therapy or death)
Lynparza 300mg tablets, bid1 SOLO-2(Lynparza vs. placebo) 0.25 30.2m vs. 5.5m 0.30 19.1m vs. 5.5m 0.28 27.9m vs. 7.1m
niraparib 300mg capsules, qd2 NOVA(niraparib vs. placebo) 0.27 21.0m vs. 5.5m 0.27 14.8m vs. 5.5m 0.31 21.0m vs. 8.4m
1bid = twice daily.
2qd = once daily.
Hettle, et al., ISPOR 20th Annual European Congress, November 2017
Safety -platinum-sensitive, relapsed gBRCA-mutated ovarian cancer
PARP inhibitor Trial Grade 3-4 adverse event %(PARP inhibitor vs. placebo) Treatment interruption %(PARP inhibitor vs. placebo) Dose reduction %(PARP inhibitor vs. placebo) Drug discontinuation % (PARP inhibitor vs. placebo)
Lynparza 300mg tablets, bid SOLO-2(Lynparza vs. placebo) 36.9 vs. 18.2 45.1 vs. 18.2 25.1 vs. 3.0 10.8 vs. 2.0
niraparib 300mg capsules, qd NOVA(niraparib vs. placebo) 74.1 vs. 22.9 68.9 vs. 5.0 66.5 vs. 15.5 14.7 vs. 2.2
Hettle, et al., ISPOR 20th Annual European Congress, November 2017
The Company also presented an update on an Asian cohort from the Phase III OlympiAD trial of Lynparza in HER2-negative,
gBRCA-mutated metastatic breast-cancer patients. Data from the 87 Asian patients demonstrated that PFS was prolonged in
patients receiving Lynparza compared with those treated with physician's choice treatment (median value of 5.7 months vs.
4.2 months, HR 0.53). The findings demonstrated that Lynparza is generally well tolerated in Asian patients and provides a
clinically-meaningful PFS benefit compared with physician's choice treatment. Efficacy and safety profiles were generally
consistent with those seen in the global population.
Updated data from the gBRCAm HER2-negative metastatic breast-cancer cohort of the MEDIOLA Phase II basket trial of Lynparza
and Imfinzi were also presented: 20 patients (80%) had disease control (comprising complete response, partial response and
stable disease) at 12 weeks (primary efficacy endpoint) and 12 patients (48%) at 28 weeks (secondary endpoint). The
combination was well tolerated and the 12-week disease control rate (80%) exceeded the pre-specified target. The data
supported the hypothesis that the addition of Imfinzi may enhance the efficacy of Lynparza monotherapy. Ongoing key
Lynparza combination trials include:
PAOLA1 III 1st line Ovarian cancer Lynparza maintenance + bevacizumab vs.bevacizumab maintenance FPCD2Q2 2015 First data anticipated 2022 Recruitment ongoing
MEDIOLA I/II Advanced gBRCA-mutated ovarian cancer 2nd line gBRCA-mutated HER2-negative breast cancer (1st to 3rd line)Small cell lung cancer (SCLC)(2nd line)Gastric cancer (2nd line) Lynparza + Imfinzi FPCDQ2 2016 Recruitment ongoing
Initial data from lung and breast cancer cohorts presented in 2017
VIOLETTE II Advanced Triple-negative breast cancer: -HRRm3 (BRCA)-HRRm (Non-BRCA)-Non-HRRm Lynparza + ATR (AZD6738) Lynparza + Wee1 (AZD1775) Lynparza FPCDQ4 2017 Recruitment ongoing
Study 8 II Advanced Metastatic castration resistant prostate cancer Lynparza + abiraterone vs. abiraterone FPCDQ3 2014 LPCD4Q3 2015 Recruitment complete
Study 8
II
Advanced
Metastatic castration resistant prostate cancer
Lynparza + abiraterone vs. abiraterone
FPCDQ3 2014 LPCD4Q3 2015
Recruitment complete
11Conducted by the ARCAGY/Groupe d'Investigateurs National des Etudes des Cancers Ovariens et du sein
2First Patient Commenced Dosing
3Homologous Recombination Repair mutated
4Last Patient Commenced Dosing
c) Tagrisso (lung cancer)
On 18 December 2017, the Company announced that the US FDA had accepted a supplemental New Drug Application (sNDA) for the
use of Tagrisso in the 1st-line treatment of patients with metastatic NSCLC whose tumours have EGFR mutations (exon 19
deletions or exon 21 (L858R) substitution mutations). The application was based on data from the Phase III FLAURA trial,
which showed that Tagrisso significantly improves PFS compared to current 1st-line EGFR tyrosine kinase inhibitors,
erlotinib or gefitinib, in previously-untreated patients with locally-advanced or metastatic EGFR-mutated NSCLC. The US FDA
granted Tagrisso Priority Review status in 2017 and previously granted Breakthrough Therapy Designation in the 1st-line
treatment of patients with metastatic EGFR-mutated NSCLC.
On 28 November 2017, the Company announced that the EMA had accepted a variation to the Marketing Authorisation Application
for Tagrisso. The application was in line with the aforementioned US application. On
27 November 2017, the Company announced the submission of a sNDA to Japan's Pharmaceuticals and Medical Devices Agency for
the use of Tagrisso for the 1st-line treatment of patients with inoperable or recurrent EGFR-mutated NSCLC.
d) Imfinzi (lung and other cancers)
The Company continues to advance multiple monotherapy trials of Imfinzi and combination trials of Imfinzi with tremelimumab
and other potential new medicines:
Lung Cancer
In November 2017, the Company presented further data at the European Society For Medical Oncology meeting in Singapore in
respect of the PACIFIC Phase III trial, including clinical activity, patient-reported outcomes and safety data regarding
sequential treatment with Imfinzi in patients with locally-advanced, unresectable NSCLC, who had not progressed following
standard platinum-based chemotherapy concurrent with radiation therapy. The analysis demonstrated a PFS improvement across
all pre-specified subgroups and the incidence of new lesions, including new brain metastases, was lower with Imfinzi vs.
placebo.
During the period, the Brazil Health Regulatory Agency granted Imfinzi an expedited review, based on the PACIFIC trial
data, as a sequential treatment in patients with locally-advanced, unresectable NSCLC, who had not progressed following
standard platinum-based chemotherapy concurrent with radiation therapy. The Republic of Korea Ministry of Food and Drug
Safety also accepted the marketing authorisation application of Imfinzi, based on the aforementioned PACIFIC trial data.
Ongoing key lung cancer late-stage trials include:
Monotherapy
ADJUVANT1 III N/A Stage Ib-IIIa NSCLC Imfinzi vs placebo FPCDQ1 2015 First data anticipated 2020 Recruitment ongoing
PACIFIC III N/A Locally-advanced, unresectable NSCLC Imfinzi vs placebo FPCDQ2 2014 LPCDQ2 2016 OS2 data anticipated 2019 Recruitment completed PFS primary endpoint met
PEARL III 1st line NSCLC (Asia) Imfinzi vs SoC3 chemotherapy FPCDQ1 2017 First data anticipated 2020 Recruitment ongoing
Combination therapy
PACIFIC-3 III N/A Locally-advanced, unresectable NSCLC Imfinzi + epacadostat vs Imfinzi First data anticipated 2021 Recruitment initiating
MYSTIC III 1st line NSCLC Imfinzi, Imfinzi + treme vs SoC chemotherapy FPCDQ3 2015 LPCDQ3 2016 Final OS data anticipated H1 2018 Recruitment completed PFS primary endpoint not met
NEPTUNE III 1st line NSCLC Imfinzi + treme vs SoC chemotherapy FPCDQ4 2015 LPCDQ2 2017 First data anticipated H2 2018 Recruitment completed
POSEIDON III 1st line NSCLC Imfinzi + SoC, Imfinzi + treme + SoC vs SoC chemotherapy FPCDQ2 2017 First data anticipated 2019 Recruitment ongoing
ARCTIC III 3rd line PDL1- low/neg. NSCLC Imfinzi, tremelimumab, Imfinzi + treme vs SoC chemotherapy FPCDQ2 2015 LPCDQ3 2016 First data anticipated H1 2018 Recruitment completed
CASPIAN III 1st line Small-cell lung cancer Imfinzi + SoC, Imfinzi + treme + SoC vs SoC chemotherapy FPCDQ1 2017 First data anticipated 2019 Recruitment ongoing
CASPIAN
III
1st line
Small-cell lung cancer
Imfinzi + SoC, Imfinzi + treme + SoC vs SoC chemotherapy
FPCDQ1 2017 First data anticipated 2019
Recruitment ongoing
1Conducted by the National Cancer Institute of Canada
2Overall survival
3Standard of care
Other Cancers
During the period, the Brazil Health Regulatory Agency granted approval to Imfinzi for the treatment of patients with
locally-advanced or metastatic bladder cancer who have suffered disease progression during or following platinum-containing
chemotherapy or who have suffered disease progression within 12 months of neoadjuvant or adjuvant treatment with
platinum-containing chemotherapy. The regulatory decision was the fastest-ever immuno-oncology approval in Brazil.
Imfinzi's approval, based on Phase Ib/II clinical-trial data, was received only 10 months after submission, reflecting the
importance of a new treatment option for patients and compelling clinical data. Ongoing key trials are listed below:
DANUBE III 1st line Cisplatin chemotherapy- eligible/ineligible bladder cancer Imfinzi, Imfinzi + treme vs SoC chemotherapy FPCDQ4 2015 LPCDQ1 2017 First data anticipated 2019 Recruitment completed
KESTREL III 1st line Head and neck squamous cell carcinoma (HNSCC, head and neck cancer) Imfinzi, Imfinzi + treme vs SoC FPCDQ4 2015 LPCDQ1 2017 First data anticipated H1 2018 Recruitment completed
EAGLE III 2nd line HNSCC Imfinzi, Imfinzi + treme vs SoC FPCDQ4 2015 LPCDQ3 2017 First data anticipated H1 2018 Recruitment completed
HIMALAYA III 1st line hepatocellular carcinoma (HCC, liver cancer) Imfinzi, Imfinzi + treme (two dosing regimens) vs sorafenib FPCDQ4 2017 Recruitment ongoing
First data anticipated 2020
HIMALAYA
III
1st line
hepatocellular carcinoma (HCC, liver cancer)
Imfinzi, Imfinzi + treme (two dosing regimens) vs sorafenib
FPCDQ4 2017
First data anticipated 2020
Recruitment ongoing
During the period, it was confirmed that the FUSION programme, conducted by Celgene Corporation (Celgene), will not enrol
further patients in the clinical trials in multiple myeloma (MM) (MM-001, MM-002, MM-003, and MM-005). This update followed
an announcement in September 2017 that Celgene had been informed that the US FDA had placed a partial clinical hold on five
trials and a full clinical hold on one trial in the programme. The trials were testing Imfinzi in combination with
immunomodulatory agents such as lenalidomide, with or without chemotherapy, in blood cancers such as MM, CLL and lymphoma.
Two ongoing Company trials of Imfinzi in myelodysplastic syndrome (MDS) and diffuse large B-cell lymphoma (DLBCL) will
continue as planned. The MDS-001 trial, that has separate cohorts for newly-diagnosed acute myeloid leukaemia and MDS
patients, has completed enrolment and will continue as planned. The DLBCL-001 trial will continue to enrol, with all
patients receiving Imfinzi + R-CHOP, a chemotherapy treatment using rituximab.
e) Calquence (blood cancer)
Following the US FDA accelerated approval of Calquence on 31 October 2017, AstraZeneca presented data from MCL and CLL
clinical trials at the aforementioned ASH meeting. Results were presented in MCL from the open-label, single-arm Phase II
ACE-LY-004 clinical trial, which served as the basis for the approval. The data demonstrated an objective response rate of
81%, with a complete response rate of 40%.
Objective response rate 81% 40%41%
(Complete response + partial response) Complete responsePartial response
Stable disease 9%
Progressive disease 8%
Not evaluable 2%
Not evaluable
2%
The data shown in the table above are as per the 2014 Lugano classification response criteria for non-Hodgkin lymphoma;
high concordance was observed between investigator-assessed and independent review committee-assessed overall response and
complete response rates, respectively.
In CLL, data from the Phase Ib/II ACE-CL-003 clinical trial and updated results from the Phase I/II ACE-CL-001 clinical
trial that are testing Calquence in combination and alone for the treatment of CLL in multiple treatment settings were also
presented. In the ACE-CL-003 trial, the combination of Calquence and obinutuzumab demonstrated an objective response rate
(the primary endpoint) of 95% for the 19 patients in the treatment-naïve cohort and 92% in the 26 patients with relapsed or
refractory CLL. Additionally, the complete response rate was 16% for treatment-naïve patients and 8% for previously-treated
patients. Longer-term safety follow-up of the Calquence monotherapy ACE-CL-001 trial was also presented where safety
(primary endpoint) and efficacy (secondary endpoint) data of the full-trial cohort of 134 patients with relapsed or
refractory CLL was shown, with a median time on trial and follow-up of 24.5 months.
CVMD
CV and metabolic diseases (CVMD) are key areas of focus for AstraZeneca 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 across
CVMD. Today, AstraZeneca is delivering life-changing results in the main CV-disease areas and their complications.
AstraZeneca is investing in the science to demonstrate CV and mortality benefits by slowing the underlying progression of
CV-related disease 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 CVMD treatment options that have the potential to deliver improved
outcomes to hundreds of millions of patients across the globe.
a) Brilinta(CV disease)
In the period, the Company announced the initiation of a new Brilinta outcomes trial, THALES; the decision to initiate
another stroke trial followed the encouraging trend data seen in the prior SOCRATES trial. The THALES trial will evaluate
the safety and efficacy of 30-day treatment with Brilinta vs. placebo, both in addition to aspirin, for reducing stroke and
death in patients who have already suffered an acute ischaemic stroke or high-risk transient ischaemic attack in the
preceding 24 hours. During the period, the first patient was dosed in the THALES trial.
b)
Farxiga
(
diabetes
)
During the period, top-line results from the ongoing DEPICT clinical programme, exploring the use of Farxiga in type-1
diabetes, became available in-house. These results from the DEPICT-1 52-week and DEPICT-2 24-week trial data demonstrated
significant and clinically-relevant reductions from baseline in HbA1c, weight reductions and lowered total daily insulin
dosing, compared to placebo at both the 5mg and 10mg dose. The safety profile of Farxiga in the DEPICT-1 52 week and
DEPICT-2 24 week trials was similar to the known safety profile of Farxiga in patients with type-2 diabetes, with the
exception of a higher proportion of diabetic ketoacidosis (DKA) events in Farxiga-treated patients vs. placebo within these
type-1 diabetes trials. Further analysis of the data is required, along with the 52 week results of the DEPICT-2 trial.
During the period, the Company also received top-line results for DERIVE, a trial designed to evaluate the glycemic
efficacy and renal safety of Farxiga in patients with type-2 diabetes and moderate renal impairment who have inadequate
glycaemic control. The top-line results showed that, in patients with type-2 diabetes and chronic kidney disease (CKD)
stage 3A, treatment with Farxiga for 24 weeks resulted in clinically-relevant and statistically-significant improvements in
glycemic control. Farxiga was well tolerated, with no imbalances in adverse events (AEs) or serious adverse events or no
new safety signals in the overall safety summary. Specifically, there were no AEs of hypoglycaemia, DKA or fractures
reported in the trial. As these were the initial data, additional sensitivity analyses and safety evaluations are being
conducted.
c)
Bydureon
(type-2
diabetes
)
In the period, the EMA approved the use of Bydureon with basal insulin based on the results of the DURATION-7 clinical
trial. The decision followed a positive recommendation in October 2017 from the Committee for Medicinal Products for Human
Use (CHMP). The DURATION-7 trial assessed the efficacy and safety of Bydureon vs. placebo when added to titrated basal
insulin with or without metformin in patients with uncontrolled type-2 diabetes over 28 weeks.
d) ZS-9 (sodium zirconium cyclosilicate) (hyperkalaemia)
During the period, the US FDA accepted the Class II regulatory resubmission for ZS-9 following the progress the Company has
made in addressing the deficiencies identified during previous inspections of the dedicated manufacturing facility in
Texas.
During the period, the CHMP reiterated its previous positive opinion and recommended the granting of a marketing
authorisation for ZS-9 in the EU, for the treatment of hyperkalaemia. A positive opinion was provided in February 2017; the
opinion was, however, suspended following concerns relating to the aforementioned manufacturing deficiencies. On the basis
of recent inspection findings, the Committee reiterated its original opinion in January 2018.
e) Roxadustat (anaemia)
During the period, the Company and its partner FibroGen Inc. (Fibrogen) announced that roxadustat was granted priority
review by the China FDA. The Company anticipates a regulatory decision in H2 2018 based on the data from two Fibrogen-led
Phase III trials, conducted in China, that met their primary efficacy endpoints in January 2017. If approved, roxadustat
will be a first-in-class medicine, with China being the first approval country, ahead of other major markets.
Major Ongoing Cardiovascular Outcomes Trials
Major ongoing outcomes trials for patients are highlighted
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