REG - AstraZeneca PLC - AZN: Year-To-Date and Q3 2017 Results Announcement <Origin Href="QuoteRef">AZN.L</Origin> - Part 2
09/11/2017 07:08
- Part 2: For the preceding part double click ID:nRSI9871Va
13,826 (6) (5)
Gross Margin3 80.3% - - - - 81.8% -1 -1
Distribution Expense (225) - - - - (225) (8) (4)
R&D Expense (4,206) 177 73 - - (3,956) (5) (2)
SG&A Expense (7,155) 265 773 235 204 (5,678) (7) (5)
Other Operating Income and Expense 982 75 44 - - 1,101 91 94
Operating Profit 2,991 645 993 235 204 5,068 8 5
% Total Revenue 17.9% - - - - 30.4% +3 +2
Net Finance Expense (1,128) - - 234 368 (526) 8 5
Taxation (213) (135) (240) (144) (86) (818) n/m n/m
Earnings Per Share $1.34 $0.40 $0.59 $0.26 $0.39 $2.98 (4) (7)
1 Other adjustments include discount unwind on acquisition-related liabilities (see Note 4), provision charges related to
certain legal matters (see Note 5) and foreign-exchange gains and losses relating to the classification of certain
non-structural intra-group loans.
2 Each of the measures in the Core column in the above table are non-GAAP measures.
3 Gross Margin as a percentage of Product Sales reflects gross profit derived from Product Sales, divided by Product Sales.
YTD 2017 Cost of Sales includes $200m of costs relating to externalisation activities (YTD 2016: $32m), which is excluded
from the calculation of Gross Margin. Movements in Gross Margin are expressed in percentage points.
Q3 2017 Reported Restructuring Intangible AssetAmortisation & Impairments Diabetes Alliance Other1 Core2 Core
Actual CER
$m $m $m $m $m $m % change
Gross Profit 4,983 47 45 - - 5,075 4 4
Gross Margin3 77.7% - - - - 79.6% -4 -4
Distribution Expense (76) - - - - (76) (1) 1
R&D Expense (1,404) 35 30 - - (1,339) - -
SG&A Expense (2,497) 68 265 102 112 (1,950) 3 4
Other Operating Income and Expense 143 (1) 1 - - 143 32 32
Operating Profit 1,149 149 341 102 112 1,853 9 9
% Total Revenue 18.4% - - - - 29.7% - -
Net Finance Expense (386) - - 70 147 (169) (2) 3
Taxation (97) (31) (78) (37) (46) (289) n/m n/m
Earnings Per Share $0.54 $0.09 $0.21 $0.11 $0.17 $1.12 (15) (17)
1 Other adjustments include discount unwind on acquisition-related liabilities (see Note 4), provision charges related to
certain legal matters (see Note 5) and foreign-exchange gains and losses relating to the classification of certain
non-structural intra-group loans.
2 Each of the measures in the Core column in the above table are non-GAAP measures.
3 Gross Margin as a percentage of Product Sales reflects gross profit derived from Product Sales, divided by Product Sales.
Q3 2017 Cost of Sales included $159m of costs relating to externalisation activities (Q3 2016: $4m), 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 To Date
Gross Profit
Reported Gross Profit declined by 6% (5% at CER) to $13,595m; Core Gross Profit declined by 6% (5% at CER) to $13,826m. The
$997m of Externalisation Revenue received as part of the Lynparza and selumetinib collaboration with MSD was outweighed by
the receding effects of the Crestor and Seroquel XR loss of exclusivity in the US.
The calculation of the Reported Gross and Core Gross Margins excludes the impact of Externalisation Revenue, thereby
reflecting the underlying performance of Product Sales. The Reported Gross Profit Margin declined by one percentage point
(two percentage points at CER) to 80.3%. The Core Gross Profit margin declined by one percentage point to 81.8%. The
declines primarily reflected the effect of losses of exclusivity, as well as the impact of supply agreements on
externalised or divested medicines.
In the quarter, the Reported Gross Profit Margin declined by four percentage points to 77.7%; the Core Gross Profit margin
declined by four percentage points to 79.6%. These declines partly reflected the magnitude of the Gross Margins in the
comparative period, as well as manufacturing costs. The profit-share element of the aforementioned MSD collaboration was
and will continue to be reflected in the Cost of Sales and the calculation of the Reported and Core Gross Margin; this also
adversely impacted the Gross Margin performance in the quarter.
Operating Expenses: R&D
Reported R&D costs declined by 3% (1% at CER) to $4,206m, with the Company continuing to focus on resource prioritisation
and cost discipline. Core R&D costs declined by 5% (2% at CER) to $3,956m. Core R&D costs over the full year are expected
to be broadly in line with those in FY 2016 at CER.
Operating Expenses: SG&A
Reported SG&A costs declined by 11% (9% at CER) to $7,155m, reflecting the evolving shape of the business. Core SG&A costs
declined by 7% (5% at CER) to $5,678m.
In the quarter, Reported SG&A costs increased by 4% (5% at CER) to $2,497m, reflecting the magnitude of the reduction in
Reported SG&A costs in the comparative period, early investment in forthcoming launches and commercial support in Emerging
Markets, particularly in China. Core SG&A costs in the quarter increased by 3% (4% at CER) to $1,950m.
The Company has continued to consolidate its operations used by multiple parts of the business. It is committed to driving
simplification and standardisation through centralisation in shared services of back-office and some middle-office
activities that are currently performed in various enabling units, including Finance, HR, Procurement and IT. Instead of
operating numerous shared-service centres and managing outsourced vendors independently, the recently-launched Global
Business Services organisation will, over time, provide integration of governance, locations and business practices to all
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 83% (86% at CER) to $982m and included:
· $301m resulting from the sale of rights to Seloken in Europe to Recordati S.p.A (Recordati)
· $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
· A milestone receipt of $50m in relation to the disposal of Zavicefta to Pfizer Inc.
· Other gains on disposal of intangible assets
Core Other Operating Income and Expense increased by 91% (94% at CER) to $1,101m, 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 increased by 26% (16% at CER) to $2,991m. The Reported Operating Margin increased by four
percentage points (three percentage points at CER) at 18% of Total Revenue. Core Operating Profit increased by 8% (5% at
CER) to $5,068m. The Core Operating Margin increased by three percentage points (two percentage points at CER) to 30% of
Total Revenue.
Net Finance Expense
Reported Net Finance Expense increased by 15% to $1,128m, primarily reflecting an adverse foreign-exchange impact relating
to the classification of certain non-structural intra-group loans. Reported Net Finance Expense increased by 4% at CER,
reflecting the impact of bond issuances in May 2016 and June 2017. Excluding the discount unwind on acquisition-related
liabilities and the adverse foreign-exchange impact, Core Net Finance Expense increased by 8% (5% at CER) to $526m.
Profit Before Tax
Reported Profit Before Tax increased by 33% (24% at CER) to $1,820m, reflecting the higher Operating Profit partly offset
by increased interest charges. EBITDA increased by 19% (15% at CER) to $4,920m.
Taxation
The Reported and Core Tax Rates for the year to date were 12% and 18% respectively. The Reported Tax Rate was lower than
the 2017 UK Corporation Tax Rate of 19.25% mainly due to the impact of tax settlements and non-taxable fair value
adjustments relating to contingent consideration on business combinations. The Core Tax Rate was lower than the 2017 UK
Corporation Tax Rate of 19.25% mainly due to the impact of tax settlements. The net cash tax paid for the year to date was
$473m, representing 26% of Reported Profit Before Tax and 11% of Core Profit Before Tax.
The Reported and Core Tax Rates for the comparative period were (16%) and 8% 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 13-year period from 2004-2016. Excluding this effect, the Reported and Core Tax
Rates for the comparative period were 17% and 19% respectively.
Earnings Per Share (EPS)
Reported EPS of $1.34 represented an increase of 3% (a decline of 4% at CER). Core EPS declined by 4% (7% at CER) to $2.98.
The performance was driven by a decline in Total Revenue, partly offset by continued progress on cost control and an
increase in Other Operating Income and Expense. The difference in growth rates between Operating Profit and EPS included
the impact of a one-off tax benefit in Q3 2016.
Cash Flow and Balance Sheet
Cash Flow
The Company generated a net cash inflow from operating activities of $2,581m in the year to date, compared with $2,185m in
the comparative period. 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.
YTD 2017 YTD 2016 Difference
$m $m $m
Reported operating profit 2,991 2,369 622
Depreciation, amortisation and impairment 1,929 1,767 162
(Increase)/decrease in working capital and short-term provisions (228) (472) 244
(Gains)/losses on disposal of intangible assets (735) (198) (537)
Fair value movement on contingent consideration arising from business combinations (62) 132 (194)
Non-cash and other movements (322) (479) 157
Interest paid (519) (489) (30)
Tax paid (473) (445) (28)
Net cash inflow from operating activities 2,581 2,185 396
Net cash outflows from investing activities were $686m in the year to date compared with $4,572m in the comparative period.
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 Bristol-Myers Squibb Company share of the global Diabetes
alliance amounted to $235m in the year to date, which included a $100m milestone payment in respect of Qtern and royalty
payments.
Net cash outflows from financing activities were $2,924m in the year to date compared to outflows of $1,020m in the
comparative period, which included cash inflows on the issuance of new long-term loans of $2,483m.
Capital Expenditure
Capital expenditure amounted to $849m in the year to date, 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
At 30 September 2017, outstanding gross debt (interest-bearing loans and borrowings) was $17,852m. Of the gross debt
outstanding at 30 September 2017, $941m was due within one year. The Company's Net Debt position at 30 September 2017 was
$12,134m.
Reconciliation of Interest-Bearing Loans and Borrowings to Net Debt
At 30 Sep 2017 At 31 Dec 2016 At 30 Sep 2016
$m $m $m
Cash and cash equivalents 4,036 5,018 3,090
Other investments 1,255 898 927
Net derivatives 427 235 267
Cash, short-term investments and derivatives 5,718 6,151 4,284
Overdrafts and short-term borrowings (930) (451) (1,075)
Finance leases (12) (93) (97)
Current instalments of loans - (1,769) (1,775)
Loans due after one year (16,910) (14,495) (14,736)
Interest-bearing loans and borrowings (gross debt) (17,852) (16,808) (17,683)
Net Debt (12,134) (10,657) (13,399)
Capital Allocation
The Board's aim is to continue to strike a balance between the interests of the business, financial creditors and the
Company's shareholders. After providing for investment in the business, supporting the progressive dividend policy and
maintaining a strong, investment-grade credit rating, the Board will keep under review potential investment in immediately
earnings-accretive, value-enhancing opportunities.
Foreign-Exchange Rates
Sensitivity
The Company provides the following currency sensitivity information:
Average Exchange Rates Versus USD Impact Of 5% Strengthening in Exchange Rate Versus USD ($m)1
Currency Primary Relevance FY 2016 YTD 20172 % change Total Revenue Core Operating Profit
EUR Product Sales 0.90 0.90 +1 +179 +123
JPY Product Sales 108.84 111.93 -3 +104 +71
CNY Product Sales 6.65 6.80 -2 +131 +74
SEK Costs 8.56 8.62 -1 +7 -98
GBP Costs 0.74 0.78 -6 +29 -131
Other3 +194 +124
1Based on 2016 results at 2016 actual exchange rates.
2Based on average daily spot rates between 1 January and 30 September 2017.
3Other important currencies include AUD, BRL, CAD, KRW and RUB.
Foreign-Exchange Hedging
AstraZeneca monitors the impact of adverse currency movements on a portfolio basis, recognising correlation effects. The
Company may hedge to protect against adverse impacts on cash flow over the short to medium term. As at 30 September 2017,
AstraZeneca had hedged 95% of forecast short-term currency exposure that arises between the booking and settlement dates on
Product Sales and non-local currency purchases.
Corporate and Business Development Update
________________________________________________________________________________________
The highlights of the Company's corporate and business development activities since the prior results announcement are
shown below:
a) AstraZeneca and MSD Establish Strategic Oncology Collaboration
On 27 July 2017, AstraZeneca and MSD announced that they had entered a global strategic oncology collaboration to
co-develop and co-commercialise Lynparza for multiple cancer types. The companies will develop and commercialise Lynparza
jointly, both as monotherapy and in combination with other potential medicines. Independently, the companies will develop
and commercialise Lynparza in combination with their respective PD-L1 and PD-1 medicines, Imfinzi and pembrolizumab.
The companies will also jointly develop and commercialise AstraZeneca's selumetinib, an oral, potent, selective inhibitor
of MEK, part of the mitogen-activated protein kinase pathway, currently being developed for multiple indications including
thyroid cancer.
As part of the agreement, MSD will pay AstraZeneca up to $8.5bn in total consideration, including $1.6bn upfront, $750m for
certain licence options and up to $6.15bn contingent upon successful achievement of future regulatory and sales milestones.
The collaboration agreement was completed upon signing. Under the terms of the agreement, AstraZeneca subsequently recorded
$997m under Externalisation Revenue. AstraZeneca books all Product Sales of Lynparza and selumetinib; gross profits due to
MSD under the collaboration are recorded under Cost of Sales. The initial, regulatory and commercial milestone payments
have been and will be recorded as Externalisation Revenue in the Company's financial statements.
b) AstraZeneca and Aspen Enter Agreement for Remaining Rights to Anaesthetics Medicines
On 14 September 2017, AstraZeneca announced that it had entered into an agreement with Aspen, under which Aspen will
acquire the residual rights to the established anaesthetic medicines comprising Diprivan, EMLA,
Xylocaine/Xylocard/Xyloproct, Marcaine, Naropin, Carbocaine and Citanest.
AstraZeneca entered into an agreement with Aspen in June 2016, under which Aspen gained the exclusive commercialisation
rights to the medicines in markets outside the US. Under the terms of the new agreement, Aspen will pay an upfront
consideration of $555m and up to $211m in performance-related milestones based on sales and gross margin during the period
from 1 September 2017 to 30 November 2019. AstraZeneca will continue to manufacture and supply the medicines to Aspen
during a transition period of up to five years.
Under the terms of the original agreement, Aspen made an upfront payment to AstraZeneca of $520m and agreed to make future
Product Sales-related payments of up to $250m, as well as paying double-digit percentage royalties on Product Sales.
AstraZeneca agreed to continue to manufacture and supply the medicines to Aspen on a cost-plus basis for an initial period
of 10 years.
The new agreement did not impact the first Product Sales-related payment of $150m due to AstraZeneca, which was recorded as
Externalisation Revenue in the Company's financial statements in the quarter. Under the new agreement, Aspen will no longer
pay royalties to AstraZeneca. The remaining $100m Product Sales-related payment from the original agreement will be made to
AstraZeneca in 2018, if the contingent terms are met and will be recorded as Other Operating Income and Expense to reflect
the reduced ongoing interest in the medicines as a result of the new agreement. Furthermore, as AstraZeneca will transition
the manufacture and supply of the medicines to Aspen and therefore will have a reduced ongoing interest, the $555m initial
and up to $211m sales and gross margin-related payments from the new agreement will also be recorded as Other Operating
Income and Expense in the Company's financial statements. The Company announced completion of the agreement on 1 November
2017.
c) Agreement for Rights to Zomig in Japan
On 30 September 2017, AstraZeneca entered into an agreement with Sawai Pharmaceuticals Company Ltd (Sawai) for the rights
to Zomig in Japan. Zomig is a legacy medicine indicated for the acute treatment of migraines and cluster headaches, an area
of medicine outside AstraZeneca's strategic focus. The divestment of the rights to Zomig in Japan follows an agreement
entered into in June 2017, under which Grünenthal acquired the rights to the medicine in all other markets. AstraZeneca
received initial revenue from Sawai which was recorded as Other Operating Income and Expense in the Company's financial
statements.
d) AstraZeneca and Takeda Establish Collaboration to Develop and Commercialise MEDI1341
On 29 August 2017, AstraZeneca and Takeda announced that they had entered an agreement to jointly develop and commercialise
MEDI1341, an antibody currently in development as a potential treatment for Parkinson's disease.
Under the terms of the agreement, AstraZeneca will lead Phase I development, while Takeda will lead future
clinical-development activities. The companies will share equally future development and commercialisation costs for
MEDI1341, as well as any future revenues. Takeda will pay AstraZeneca up to $400m, including initial income of $50m in Q3
2017 and development and sales milestones thereafter, all recorded as Externalisation Revenue in the Company's financial
statements. Additional terms of the agreement were not disclosed.
e) MedImmune and NewLink Announce Collaboration on Immuno-Oncology Combination Clinical Trial
During the period, it was announced that MedImmune, the Company's global biologics research and development arm and NewLink
Genetics Corporation (NewLink Genetics) had entered into a clinical collaboration agreement to evaluate the combination of
Imfinzi, AstraZeneca's PD-L1 monoclonal antibody and indoximod, NewLink Genetics' small molecule IDO pathway inhibitor,
along with standard-of-care chemotherapy for patients with metastatic pancreatic cancer. The primary objective for this
randomised, placebo-controlled, Phase II trial is to evaluate the immuno-oncology-based combination compared to gemcitabine
alone.
f) AstraZeneca and Incyte Enter Clinical-Trial Collaboration in Early Lung Cancer
On 31 October 2017, the Company announced the expansion of its clinical collaboration with Incyte Corporation (Incyte). As
part of the agreement, the companies will evaluate the efficacy and safety of epacadostat, Incyte's investigational
selective IDO1 enzyme inhibitor, in combination with Imfinzi, compared to Imfinzi alone. The exclusive collaboration for
the trial population allows for the two companies to conduct a Phase III trial in patients with locally-advanced (Stage
III), unresectable NSCLC whose disease has not progressed following platinum-based chemotherapy concurrent with radiation
therapy (CRT). This agreement builds on the positive clinical data readout from the PACIFIC trial, published in September
2017.
g) Senior Executive Team Changes
On 10 October 2017, David Fredrickson was appointed Executive Vice-President, Global Head Oncology Business Unit (OBU),
with responsibility for sales, marketing, medical affairs and diagnostics for Oncology medicines globally, as well as
Oncology commercial operations in the US, UK, Spain, Italy, Germany and France. Prior to this appointment, Mr. Fredrickson
was President and Country Representative, Japan, where he was responsible for, inter alia, the launch of Tagrisso. Before
that, as Vice President, US for Oncology, Infectious Diseases and Neuroscience, he was responsible for the US launches of
Tagrisso, Lynparza and Iressa. Mr. Fredrickson also spent a number of years at Roche Holding Ltd.
He became a member of the Senior Executive Team, reporting to the Chief Executive Officer on 10 October 2017. Mr
Fredrickson took over leadership of the OBU from Jamie Freedman, who was appointed President, AstraZeneca Canada, effective
on the same day.
Research and Development Update
________________________________________________________________________________________
A comprehensive table with AstraZeneca's pipeline of medicines in human trials can be found later in this document. Since
the results announcement on 27 July 2017 (the period):
RegulatoryApprovals 9 - Faslodex - breast cancer (1st line) (US)- Lynparza - ovarian cancer (2nd line, 4th line/tablets) (US)- Calquence (acalabrutinib) - MCL (2nd line) (US) - Brilinta - prior MI (CN)- Farxiga + Bydureon - type-2 diabetes (US, EU)- BydureonBCise - type-2 diabetes (US)- Symbicort - COPD exacerbations (US)
RegulatorySubmissionAcceptances 6 - Lynparza - breast cancer (US, JP) (Priority Reviews)- Imfinzi - locally-advanced, unresectable NSCLC ((US/Priority Review), EU, JP)- BydureonBCise - type-2 diabetes (EU)
MajorPhase IIIData Readouts 5 - Tagrisso - lung cancer (1st line) (FLAURA) (met primary endpoint)- Imfinzi - lung cancer (MYSTIC) (did not meet PFS primary endpoint)- moxetumomab pasudotox - leukaemia (met primary endpoint)- Duaklir - COPD (met primary endpoint)- tralokinumab - severe, uncontrolled asthma (did not meet primary endpoints)
Other Major Developments 3 - Tagrisso - lung cancer (1st line)(Breakthrough Therapy Designation, US)- Imfinzi - locally-advanced, unresectable lung cancer(Breakthrough Therapy Designation, US)- Calquence - MCL (2nd line) (Breakthrough Therapy Designation, US)
New Molecular Entities 11 Oncology- Imfinzi + treme - multiple cancers- moxetumomab pasudotox - leukaemia- selumetinib - thyroid cancer- savolitinib - kidney cancer CVMD- ZS-9 (sodium zirconium cyclosilicate) - hyperkalaemia*- roxadustat - anaemia* Respiratory- benralizumab - severe, uncontrolled asthma*, COPD - tralokinumab - severe, uncontrolled asthma- PT010 - COPD Other- anifrolumab - lupus- lanabecestat - Alzheimer's disease
(NMEs) in Phase III Trials or Under Regulatory Review
Projects in Clinical Pipeline 129
*Under Regulatory Review. The table shown above as at 9 November 2017.
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 lung, ovarian, breast and blood cancers, as one of AstraZeneca's five Growth Platforms.
At the recent 2017 European Society of Medical Oncology (ESMO) annual meeting, AstraZeneca presented data from more than 40
abstracts, including two pivotal clinical-trial readouts selected for late-breaking presentation at the Presidential
Symposium. Highlights included new data on approved and potential new medicines from the Company's pipeline across multiple
scientific platforms and tumour types.
a) Faslodex (breast cancer)
On 28 August 2017, the Company announced approval in the US for the expansion of Faslodex use into advanced breast-cancer
patients not previously treated with endocrine (hormonal) medicines. The US FDA approval was based on data from the Phase
III FALCON trial, where Faslodex 500mg demonstrated superiority over anastrozole 1mg in the treatment of locally-advanced
or metastatic breast cancer in post-menopausal patients who had not received prior hormonal-based medicine for hormone
receptor-positive breast cancer. The FALCON trial data showed that Faslodex significantly reduced the risk of disease
worsening or death by 20%.
During the period, the Company announced that the Committee for Medicinal Products for Human Use (CHMP) of the European
Medicines Agency (EMA) had adopted a positive opinion recommending a new indication for Faslodex that will expand its use
to include combination therapy with palbociclib. The combination use was designed for the treatment of patients with
hormone receptor-positive (HR+), human epidermal growth factor receptor 2 negative (HER2-) locally-advanced or metastatic
breast cancer or who have received prior endocrine therapy. The CHMP opinion was based on data from the Phase III PALOMA-3
trial which demonstrated that the combination of Faslodex 500mg and palbociclib 125mg resulted in a 4.9 month
progression-free survival (PFS) improvement over Faslodex and placebo.
The Company also announced during the period that the US FDA had approved a new indication for Faslodex, expanding the
indication to include use with abemaciclib for the treatment of HR+, HER2- advanced or metastatic breast cancer in patients
with disease progression after endocrine therapy. The US FDA approval was based on data from the Phase III MONARCH 2 trial,
which met the primary endpoint of PFS.
Finally, the Company announced during the period the approval of the supplemental New Drug Application (NDA) of Faslodex in
combination with palbociclib in Japan, based on data from the PALOMA-3 trial; the approval was for the treatment of
pre-menopausal breast cancer patients taking a luteinising hormone-releasing hormone medication.
b) Lynparza (multiple cancers)
On 17 August 2017, the Company announced approval in the US for Lynparza tablets as a maintenance treatment for patients
with platinum-sensitive recurrent ovarian cancer, regardless of BRCA-mutation status. Lynparza tablets were also indicated
for patients with BRCA-mutated ovarian cancer beyond the 3rd-line setting, with the Accelerated Approval converted to full
approval. Data from two randomised trials supported the new approval and the conversion of the prior approval to full
approval, originally based on a single-arm trial.
Data from the Phase III SOLO-2 trial confirmed the benefit of Lynparza in germline BRCA-mutated (gBRCAm) patients,
demonstrating a 70% reduced risk of disease progression or death (HR, hazard ratio, 0.30) and improved PFS to 19.1 vs 5.5
months for placebo by investigator-assessed analysis. Data from the Phase II Study-19 trial showed that Lynparza reduced
the risk of disease progression or death by 65% and improved PFS compared to placebo in patients of any BRCA status (HR
0.35; median PFS of 8.4 months vs 4.8 months for placebo). Additionally, patients in Study 19, treated with Lynparza as a
maintenance therapy, had a median overall survival (OS) of 29.8 months vs 27.8 months for placebo (HR 0.73).
During the period, the Company received regulatory submission acceptance in the US for Lynparza tablet's supplementary NDA
based on the OlympiAD trial data in breast cancer. In the period, the Company also announced the submission of an NDA to
Japan's Pharmaceuticals and Medical Devices Agency for the use of Lynparza tablets in unresectable or recurrent
BRCA-mutated breast cancer, with a decision expected in the second half of 2018. The OlympiAD trial focused on patients
with germline BRCA-mutated, HER2- metastatic breast cancer who had been treated previously with chemotherapy either in the
neo-adjuvant, adjuvant or metastatic settings. This followed the Phase III OlympiAD data presented at the 2017 American
Society of Clinical Oncology annual meeting. Lynparza is the first PARP inhibitor with a regulatory submission outside
ovarian cancer.
c) Tagrisso (lung cancer)
At the recent ESMO Congress's Presidential Symposium, the Company presented positive results from the Phase III FLAURA
trial for patients with 1st-line epidermal growth factor receptor (EGFR)-mutated NSCLC. Patients treated with Tagrisso had
less than half the risk of progression or death compared with patients on erlotinib or gefitinib (HR 0.46). The median PFS
was 18.9 months for patients on Tagrisso vs. 10.2 months for patients in the comparator arm. FLAURA demonstrated
clinically-meaningful preliminary OS data favouring Tagrisso, namely a 37% reduction in the risk of death. OS data were 25%
mature at the time of the interim analysis and a final OS analysis is planned for a later stage.
Improvements in PFS with Tagrisso were consistent across all pre-specified patient subgroups, with at least a 40% reduction
in the risk of progression or death, including in patients with or without central nervous system metastases at trial
entry, Asian/non-Asian patients, patients with or without prior smoking history and patients with exon 19 deletion/L858R.
Patients treated with Tagrisso had more than double the median duration of response than those on the comparator arm (17.2
months vs. 8.5 months), while the objective response rates (ORR) were similar.
The US National Comprehensive Cancer Network (NCCN) guidelines were updated on 28 September 2017 to include Tagrisso as a
category-2A treatment option in NSCLC patients with an EGFR mutation discovered prior to 1st-line treatment. The medicine
is not currently approved for treatment in the 1st-line setting.
During the period, the Company and its partner Hutchison China MediTech Limited presented preliminary safety and clinical
activity of savolitinib when given in combination with Tagrisso in a Phase Ib trial at the International Association for
the Study of Lung Cancer 18th World Conference on Lung Cancer in Japan. The trial was conducted in patients with
EGFR-mutation-positive NSCLC with mesenchymal epithelial transition (MET)-amplification, who had progressed following
1st-line treatment with a tyrosine kinase inhibitor (TKI). Early data on safety and anti-tumour activity for savolitinib
plus Tagrisso demonstrated a response according to RECIST 1.1 criteria in 28% of patients previously treated with
third-generation T790M-directed EGFR TKIs, including Tagrisso. In patients who had progressed after prior treatment with a
first- or second-generation EGFR inhibitor, 53% of T790M-negative patients had a partial response, while 57% of
T790M-positive patients had a partial response. In the 66 patients treated with savolitinib plus Tagrisso, the most common
all-causality adverse events of any grade were consistent with the known safety profiles of both therapies, including
nausea (44%), vomiting (35%), fatigue (30%), and decreased appetite (30%).
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
During the period, the Company maintained strong momentum in its early immunotherapy efforts in lung cancer. On 31 July
2017, Imfinzi was granted Breakthrough Therapy Designation by the US FDA for patients with locally-advanced, unresectable
NSCLC. PACIFIC is a Phase III, randomised, double-blinded, placebo-controlled multi-centre trial of Imfinzi as sequential
treatment in patients with locally-advanced (Stage III) unresectable NSCLC, who had not progressed following standard
platinum-based chemotherapy concurrent with radiation therapy. PACIFIC trial results presented at the 2017 ESMO annual
meeting showed a statistically-significant and clinically-meaningful PFS benefit with Imfinzi and also demonstrated a
favourable risk/benefit profile. The trial will continue in order to evaluate OS, the other primary endpoint, which is
anticipated to be assessed in 2019.
During the period, the US FDA accepted a supplemental Biologics License Application for Imfinzi for the treatment of
patients with locally-advanced, unresectable NSCLC whose disease has not progressed following platinum-based chemoradiation
therapy. The agency granted Imfinzi Priority Review status in this potential indication. The Company also recently
submitted the data from the PACIFIC trial to the EMA for the same indication and received acceptance of the submission.
Additional regulatory submissions for the PACIFIC trial were made and/or accepted in the period in Australia, Brazil,
Canada, Japan and Switzerland.
On 28 September 2017, the US NCCN Clinical Practice Guidelines in Oncology were updated to include Imfinzi for the
treatment of patients with locally-advanced, unresectable NSCLC with no disease progression after two or more cycles of
definitive chemoradiation, based on the data from the aforementioned PACIFIC trial. The medicine is not currently approved
for treatment in the locally-advanced, unresectable NSCLC setting.
The Company now expects the first data from the Phase III ARCTIC trial in 3rd-line, PDL1-low/negative NSCLC to be available
in H1 2018. The timeline reflects the event-driven nature of the trial as the Company awaits greater maturity of OS data.
Ongoing key lung-cancer trials include:
Monotherapy
ADJUVANT* III N/A Stage Ib-IIIa NSCLC Imfinzi vs placebo FPCD1 Q1 2015 First data anticipated 2020 Recruitment ongoing
PACIFIC III N/A Locally-advanced (Stage III), unresectable NSCLC Imfinzi vs placebo FPCD Q2 2014 LPCD2 Q2 2016 Final OS data anticipated 2019 Recruitment completed PFS primary endpoint met
PEARL III 1st line NSCLC (Asia) Imfinzi vs SoC chemotherapy FPCD Q1 2017 First data anticipated 2020 Recruitment ongoing
Combination therapy
MYSTIC III 1st line NSCLC Imfinzi, Imfinzi + treme vs SoC chemotherapy FPCD Q3 2015 LPCD Q3 2016 Final OS data anticipated H1 2018 Recruitment completed PFS primary endpoint not met
NEPTUNE III 1st line NSCLC Imfinzi + treme vs SoC chemotherapy FPCD Q4 2015 LPCD Q2 2017 First data anticipated H2 2018 Recruitment completed
POSEIDON III 1st line NSCLC Imfinzi + SoC, Imfinzi + treme + SoC vs SoC chemotherapy FPCD Q2 2017 First data anticipated 2019 Recruitment ongoing
ARCTIC III 3rd line PDL1- low/neg. NSCLC Imfinzi, tremelimumab, Imfinzi + treme vs SoC chemotherapy FPCD Q2 2015 LPCD Q3 2016 First data anticipated H1 2018 Recruitment completed
CASPIAN III 1st line Small-cell lung cancer (SCLC) Imfinzi + SoC, Imfinzi + treme + SoC vs SoC chemotherapy FPCD Q1 2017 First data anticipated 2020 Recruitment ongoing
CASPIAN
III
1st line
Small-cell lung cancer (SCLC)
Imfinzi + SoC, Imfinzi + treme + SoC vs SoC chemotherapy
FPCD Q1 2017 First data anticipated 2020
Recruitment ongoing
*Conducted by the National Cancer Institute of Canada
1First Patient Commenced Dosing
2Last Patient Commenced Dosing
Other Cancers
In November 2017, Imfinzi received approval in Canada, under the Health Canada's accelerated-approval framework (Notice of
Compliance with Conditions (NOC/c) policy), for the treatment of patients with locally-advanced or mUC who have disease
progression during or following platinum-containing chemotherapy, or whose disease has progressed within 12 months of
receiving platinum-containing chemotherapy before (neoadjuvant) or after (adjuvant) surgery. Approval was granted in an
'all-comer' population based on both tumour response rate and duration of response. Data from Study 1108, which supported
this approval, was shared at the recent 2017 ASCO annual meeting and showed a 17.0% objective response rate (ORR) by BICR
in all-comers and a 26.3% ORR in patients with PDL1-positive tumours.
During the period, the Company amended its late-stage clinical development programme in 1st-line locally-advanced or
metastatic urothelial carcinoma (bladder cancer). A refinement of the Phase III DANUBE trial meant that OS became the only
primary endpoint, with the first data now anticipated in 2019. Patient enrolment was also increased from 1,005 to 1,200
patients, reflecting the inclusion of an expansion cohort in China.
The STRONG trial, a Phase IIIb, modular, five-year safety, open-label trial commenced dosing in the period and will
evaluate the safety of a fixed-dose regimen equivalent to the current weight-based dose regimen of Imfinzi + tremelimumab
combination therapy or Imfinzi monotherapy in patients with advanced solid tumours (via tumour-specific modules). The first
tumour module dosed was metastatic urothelial carcinoma.
During the period, the Company launched a new Phase III trial to assess the safety and efficacy of Imfinzi monotherapy or
Imfinzi plus tremelimumab combination therapy versus standard of care in patients with unresectable hepatocellular
carcinoma (HCC, liver cancer). The HIMALAYA trial will include a fixed dose of Imfinzi (1,500mg, monthly) and tremelimumab
(300mg).
Ongoing key trials are listed below:
DANUBE III 1st line Cisplatin chemotherapy- eligible/ineligible bladder cancer Imfinzi, Imfinzi + treme vs SoC chemotherapy FPCD Q4 2015 LPCD Q1 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 FPCD Q4 2015 LPCD Q1 2017 First data anticipated H1 2018 Recruitment completed
EAGLE III 2nd line HNSCC Imfinzi, Imfinzi + treme vs SoC FPCD Q4 2015 LPCD Q3 2017 First data anticipated H1 2018 Recruitment completed
HIMALAYA III 1st line HCC Imfinzi, Imfinzi + treme vs sorafenib First data anticipated 2019 Recruitment ongoing
HIMALAYA
III
1st line
HCC
Imfinzi, Imfinzi + treme vs sorafenib
First data anticipated 2019
Recruitment ongoing
On 7 September 2017, the Company announced that its partner, Celgene Corporation (Celgene) was informed by the US FDA that
the agency had placed a partial clinical hold on five trials and a full clinical hold on one trial in the Celgene FUSION
programme. The trials are testing Imfinzi in combination with immunomodulatory agents such as lenalidomide, with or without
chemotherapy, in blood cancers such as multiple myeloma, chronic lymphocytic leukaemia and lymphoma.
e) Calquence (acalabrutinib) (blood cancer)
On 31 October 2017, the Company announced that the US FDA had granted Accelerated Approval to Calquence, a kinase inhibitor
indicated for the treatment of adult patients with MCL who have received at least one prior therapy. Calquence was approved
under the FDA's Accelerated Approval Program, based on overall response rate, which allows for earlier approval of
medicines that treat serious conditions and fill an unmet medical need based on a surrogate endpoint. Continued approval
for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.
The Accelerated Approval was based on results from the ACE-LY-004 trial, where Calquence demonstrated an 80% ORR, with a
40% complete response and 40% partial-response rate. Full results from the ACE-LY-004 clinical trial will be presented in
December 2017 at the 59th American Society of Hematology annual meeting in Atlanta, US. The approval followed acceptance of
the submission and the granting of Priority Review and Breakthrough Therapy Designation earlier in the period, based on the
totality of clinical data from the Calquence development programme, including data from the Phase II ACE-LY-004 clinical
trial.
f) Moxetumomab pasudotox (leukaemia)
During the period, the Company maintained momentum in its efforts in blood cancers, with high-level results from a pivotal
Phase III single-arm trial of moxetumomab pasudotox, an anti-CD22 recombinant immunotoxin, as treatment for adult patients
with relapsed/refractory hairy cell leukaemia (HCL) who have had at least two prior lines of therapy. The clinical trial
met its primary endpoint of durable complete response. HCL is an orphan disease with no cure and no established standard of
care for patients in late-line therapy who relapse or refractory to prior therapies. AstraZeneca plans to submit the
complete results from the Phase III trial for presentation at a forthcoming medical meeting.
CVMD
CV, renal and metabolic diseases 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, but to modify or even halt 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) Brilique (CV disease)
During the period, the China FDA approved Brilique 60mg tablets for patients with a history of MI, following an MI event.
The approval was based on data from the PEGASUS trial and expanded the use of Brilique in combination with aspirin, to
reduce the rate of CV death, MI and stroke in patients with a history of MI and at least one additional high-risk factor
for developing an atherothrombotic event.
During the 2017 European Society of Cardiology congress in Barcelona, AstraZeneca presented results from a new sub-analysis
of data from the Phase III PEGASUS trial. The trial showed that treatment with Brilique 60mg twice daily reduced the risk
in CV-caused death (versus placebo) by 29% in patients taking low-dose aspirin but still at high risk of an
atherothrombotic event.
b)
Farxiga
(
diabetes
)
24-week data from the DEPICT-1 trial was published in The Lancet Diabetes and Endocrinology and presented at the 2017
European Association for the Study of Diabetes (EASD) 53rd annual meeting in September 2017. The trial showed that Farxiga,
when given as an oral adjunct to injectable insulin in patients with inadequately-controlled type-1 diabetes, demonstrated
significant and clinically-relevant reductions from baseline in HbA1c, weight reductions and lowered total daily insulin
dosing at 24 weeks compared to placebo at both the 5mg and 10mg dose. Furthermore, as assessed by continuous glucose
monitoring, treatment with Farxiga at both doses reduced mean glucose and glucose fluctuations (assessed by mean amplitude
of glycaemic excursions) and increased the percentage of glucose readings in the target range (70-180mg/dL). Specifically,
patients treated with Farxiga 5mg and 10mg spent more than two hours and more than 2.5 hours longer in the target glucose
range each day, respectively.
The overall adverse event profile was in line with the known clinical profile of Farxiga, with no imbalance in adverse
events reported. The occurrence of hypoglycaemia overall, as well as severe hypoglycaemia, was not increased in the Farxiga
treatment groups compared with placebo. Similarly, in this trial, Farxiga was not associated with an increase in the
occurrence of definite diabetic ketoacidosis (DKA) compared with placebo. Four (1%) events occurred in the Farxiga 5mg
group, five (2%) occurred in the Farxiga 10mg group and three (1%) occurred in the placebo group, respectively. Insulin
pump failure and missed insulin doses were the most frequent risk factors for definite DKA in the placebo and Farxiga
groups.
The DEPICT clinical programme for Farxiga is ongoing; final results are required to evaluate the next regulatory
steps.Farxiga is not currently approved for the treatment of type-1 diabetes.
c) Bydureon (type-2diabetes)
AstraZeneca presented the full results from the EXSCEL (EXenatide Study of Cardiovascular Event Lowering) trial at the
aforementioned EASD meeting. The trial demonstrated CV safety with Bydureon (exenatide extended-release) in patients with
type-2 diabetes across a range of CV outcomes.
Bydureon did not increase the incidence of major adverse CV events (MACE), a composite endpoint of CV death, non-fatal
heart attack or non-fatal stroke, compared to placebo (HR 0.91; 95% confidence interval (CI): 0.83-1.00; p<0.001 for
non-inferiority). There were also fewer CV events observed in the Bydureon arm of the trial (839 (11.4%) versus 905
(12.2%)), although the primary efficacy objective of a superior reduction in MACE did not meet statistical significance
(p=0.061). Additionally, in a pre-specified secondary analysis, patients treated with exenatide had a 14% lower incidence
of death from all causes (HR: 0.86; 95% CI: 0.77-0.97).
During the period, the US FDA approved the inclusion of data from the DURATION-8 clinical trial into the Farxiga and
Bydureon labels. DURATION-8 evaluated the simultaneous combination of a GLP-1 receptor agonist with an SGLT2 inhibitor on a
background of metformin therapy, in high baseline HbA1c patients with inadequate glycemic control. The results demonstrated
that combining agents that work in different ways can significantly reduce HbA1c, as well as weight and systolic blood
pressure.
In August 2017, the EMA approved the incorporation of DURATION-8 data into the Bydureon label. The label included updates
to both the indication statement and the clinical-trial section. DURATION-8 data is now represented in both the Bydureon
and Forxiga European summary of product characteristics.
In October 2017, the Company announced that the US FDA had approved BydureonBCise (exenatide extended-release) injectable
suspension, a new formulation of Bydureon in an improved once-weekly, single-dose BCise device for adults with type-2
diabetes whose blood sugar remains uncontrolled on one or more oral medicines in addition to diet and exercise, to improve
glycaemic control. AstraZeneca anticipates that Bydureon BCise will be available for patients in the US in the first
quarter of 2018. A regulatory application for the new BCise device was also accepted by the EMA in the period.
Major ongoing outcomes trials for patients are highlighted in the following table:
Medicine Trial Mechanism Population Primary Endpoint Timeline
Farxiga DECLARE SGLT2 inhibitor ~17,0001 patients with type-2 diabetes Time to first occurrence of CV death, non-fatal MI or non-fatal stroke H2 2018 (final analysis)
Farxiga DAPA-HF SGLT2 inhibitor ~4,500 patients with heart failure (HF) Time to first occurrence of CV death or hospitalisation for HF or an urgent HF visit FPCD Q1 2017
Farxiga DAPA-CKD SGLT2 inhibitor ~4,000 patients with chronic kidney disease (CKD) Time to first occurrence of ≥50% sustained decline in eGFR2 or reaching ESRD3 or CV death or renal death FPCD Q1 2017
Brilinta THEMIS P2Y12 receptor antagonist ~19,000 patients with type-2 diabetesand coronary artery diseasewithout a history ofMI or stroke Composite ofCV death, non-fatal MIand non-fatal stroke 2019
Epanova STRENGTH Omega-3 carboxylic acids ~13,000 patients with mixed dyslipidaemia Time to first occurrence of CV death, non-fatal MI or non-fatal stroke 2019
1Includes ~10,000 patients who have had no prior index event (primary prevention) and ~7,000 patients who have suffered an
index event (secondary prevention)
2Estimated Glomerular Filtration Rate
3End-Stage Renal Disease
d) ZS-9 (sodium zirconium cyclosilicate) (hyperkalaemia)
In April 2017, the EMA informed AstraZeneca that the Marketing Authorisation Application decision process for ZS-9 was put
on hold until the agency had performed an inspection of the dedicated substance-manufacturing facility in Texas, US. This
followed receipt
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