AstraZeneca : Year-to-date and Q3 2022 results announcement

AstraZeneca PLC

10 November 2022 07:00 GMT

YTD and Q3 2022 results

Record number of regulatory approvals and guidance uplift underpinned by strong business performance

Revenue and EPS summary

• Product Sales
• Collaboration Revenue Total Revenue Reported2 EPS3 Core4 EPS

	YTD 2022			Q3 2022
	% Change			% Change
$m	Actual	CER1	$m	Actual	CER
32,200	29	35	10,590	9	16
944	>2x	>2x	392	>3x	>3x
33,144	30	37	10,982	11	19
$1.54	>4x	>4x	$1.06	n/m	n/m
$5.28	47	52	$1.67	55	70

YTD 2022 Financial performance (growth numbers and commentary at CER5)

• Total Revenue increased 37% to $33,144m, with growth coming from all disease areas, and from the addition of Alexion, which was incorporated into the Group's results from 21 July 2021
• Oncology Total Revenue increased 24%, inclusive of milestone payments from MSD6 for Lynparza. Oncology Product Sales increased 20%. Total Revenue from R&I7 increased 4%, CVRM8 increased 19%9 and Rare Disease increased 10%9
• Core Gross Margin of 81%, up six percentage points at CER, reflecting the lower revenue from initial Vaxzevria contracts and the increased share of specialty care medicines
• Core Total Operating Expense increased 26%, reflecting the addition of Alexion, continued investment in new launches and the pipeline, to deliver sustainable long-term growth
• Core Operating Margin of 32%, up six percentage points at CER, benefitting from favourable phasing and product mix
• Core EPS increased 52% to $5.28
• FY 2022 Core EPS at constant exchange rates now expected to increase by a high twenties to low thirties percentage, vs previous guidance of a mid-to-high twenties increase. At actual exchange rates, FY 2022 Core EPS growth is anticipated to be impacted by a currency headwind10 of a mid-to-highsingle-digit percentage, versus previous guidance of a mid single-digit headwind

Key milestones achieved since the prior results

• Key data: Positive Phase III read-outs for danicopan in PNH-EVH11 (ALPHA) and for capivasertib in 2nd-lineHR-positive, metastatic breast cancer (CAPItello-291)
• Key regulatory approvals: 19 approvals in major markets since H1 2022 results, including US approvals for Enhertu in HER212-low breast cancer (DESTINY-Breast04) and advanced NSCLC13 (DESTINY-Lung02),Imjudo and Imfinzi in advanced liver cancer (HIMALAYA), Imfinzi in advanced biliary tract cancer (TOPAZ-1); EU approval for Beyfortus for the prevention of RSV14 lower respiratory tract disease (MELODY/MEDLEY); EU and Japan approvals for Ultomiris in gMG15 (CHAMPION-MG),Tezspire in severe asthma (NAVIGATOR) and Lynparza in early breast cancer (OlympiA)
• Other regulatory milestones: US Priority Review for Lynparza for 1st-line metastatic castration-resistant prostate cancer (PROpel)

Pascal Soriot, Chief Executive Officer, AstraZeneca, said:

"AstraZeneca continues to see the benefit of our sustained investment in R&D, with 19 major regulatory approvals since our last earnings call.

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After a strong performance in the year to date, we have increased our Core EPS guidance for the full year 2022. Additionally, recent encouraging data for several of our pipeline programmes have given us the confidence to proceed with additional late-stage clinical trials as we maintain our focus on delivery of our growth ambitions.

I would also like to highlight the announcement at COP27 to accelerate the delivery of our net zero strategy. Our company intends to lead by example on this increasingly important objective for the world."

Guidance

The Company updates its FY 2022 guidance at CER, due to the strong performance in the year to date. The guided range for FY 2022 Core EPS has been increased to a high twenties to low thirties percentage; the final outcome within that range will depend on the timing of Evusheld deliveries and collaboration milestones linked to regulatory events.

At actual exchange rates, it is anticipated that FY 2022 Total Revenue growth will also be impacted by a currency headwind of a mid single-digit percentage, and that FY 2022 Core EPS growth will be impacted by a currency headwind of a mid-to-highsingle-digit percentage (see 'Currency impact', below).

Total Revenue is expected to increase by a low twenties percentage (unchanged)

Core EPS is expected to increase by a high twenties to low thirties percentage

(previously mid-to-high twenties percentage)

Other elements of the Income Statement are expected to be broadly in line with the indications issued in the Company's H1 2022 results announcement (29 July 2022).

AstraZeneca continues to recognise geopolitical and supply chain uncertainties on overall business performance. Variations in performance between quarters can be expected to continue.

The Company is unable to provide guidance on a Reported basis because AstraZeneca cannot reliably forecast material elements of the Reported result, including any fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal settlement provisions. Please refer to the cautionary statements section regarding forward-looking statements at the end of this announcement.

Currency impact

The growth numbers in the guidance above are provided at CER, based on the average exchange rates through 2021.

If foreign-exchange rates for November to December 2022 were to remain at the spot rates seen on 31 October 2022, it is anticipated that FY 2022 Total Revenue would incur a mid single-digit adverse impact versus the performance at CER, and FY 2022 Core EPS would incur a mid-to-highsingle-digit adverse impact (previously a mid single-digit adverse impact).

The Company's foreign-exchange rate sensitivity analysis is provided in Table 17.

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Table 1: Key elements of Total Revenue performance in Q3 2022

Revenue type

Product Sales Collaboration Revenue

Total Revenue

Disease areas

Oncology

CVRM9

R&I

V&I17

Rare Disease9

Other Medicines

Total Revenue

Regions inc. Vaxzevria

Emerging Markets

• China
• Ex-ChinaEmerging Markets
  US Europe Established RoW
  Total Revenue inc. Vaxzevria

Regions exc. Vaxzevria

Emerging Markets

• China
• Ex-ChinaEmerging Markets
  US Europe Established RoW
  Total Revenue exc. Vaxzevria

	% Change
$m	Actual	CER
10,590	9	16	 Strong Oncology and BioPharmaceuticals sales
			 $1,734m from medicines acquired with Alexion
392	>3x	>3x	 $160m for Enhertu (Q3 2021: $52m)
			 $26m for Tezspire (Q3 2021: $nil)
			 Milestones of $75m for Lynparza, $62m for
			Nexium and $40m for tralokinumab
10,982	11	19

$m	Actual	CER
4,039	20	27	 Good performance across key medicines and
			regions
2,351	11	18	 Farxiga achieved its third consecutive
			blockbuster quarter with $1,103m in revenues
1,499	1	5	 Growth across Breztri and Fasenra offsetting a
			decline in Pulmicort of 33% (31% at CER)
			primarily due to the impact of VBP16
			implementation and COVID-19 lockdowns in
			China
878	(29)	(24)	 $180m from Vaxzevria18 (Q3 2021: $1,050m)
			 $536m from Evusheld (Q3 2021: $nil)
1,741	4	11	 $518m from Ultomiris which was up 37% (47% at
			CER)
474	34	50	 Includes a Collaboration Revenue milestone of
			$62m for Nexium. Nexium revenue in Q3 2021
			was negatively impacted by a transition in
			distribution partners
10,982	11	19

$m	Actual	CER
2,856	(10)	(4)	 Decline due to lower sales of Vaxzevria (growth
				rates excluding Vaxzevria shown below)
1,541	3	8	 Q3 2021 was negatively impacted by Tagrisso
				inventory phasing and stock compensation
				following NRDL19 changes
1,316	(21)	(15)	 Decline due to lower sales of Vaxzevria
4,650	34	34
2,065	8	23
1,412	7	26
10,982	11	19
$m	Actual	CER	Contribution of medicines acquired with Alexion†
2,826	13	20		$102m
1,541	3	8
1,285	26	37		$102m
4,650	34	34		$1,069m
2,002	14	30		$351m
1,325	22	45		$212m
10,803	23	31		$1,734m

• Alexion was incorporated into the Group's results from 21 July 2021, hence Alexion medicines contributed 72 days of revenues and costs in AstraZeneca's Q3 2021 results, compared to 92 days in Q3 2022.

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Table 2: Key elements of financial performance in Q3 2022

Metric	Reported Reported	Core	Core
		change		change
Total	$10,982m	11% Actual	$10,982m	11% Actual
Revenue	19% CER	19% CER
Gross	72%	10pp Actual	81%	6pp Actual
Margin21	11pp CER	7pp CER

R&D	$2,458m	-32% Actual	$2,357m	10% Actual
Expense	-28% CER	16% CER

SG&A	$4,277m	5% Actual	$3,160m	10% Actual
Expense	9% CER	16% CER
Other		>2x Actual		>2x Actual
Operating	$106m	$107m
>2x CER	>3x CER
Income22
Operating	11%	28pp Actual	31%	8pp Actual
Margin	30pp CER	9pp CER
Net Finance	$324m	1% Actual	$254m	16% Actual
Expense	2% CER	14% CER

Tax Rate	-78%	n/m	18%	-3pp Actual
-3pp CER

EPS	$1.06	n/m	$1.67	55% Actual
70% CER

Comments20

• See Table 1 and the Total Revenue section of this document for further details

• Addition of Alexion†
• Increasing mix of Oncology sales

• Impact from profit-sharing arrangements (e.g. Lynparza)
• Reported Gross Margin impacted by unwind of Alexion inventory fair value adjustment

• Addition of Alexion†
• Increased investment in the pipeline following ungating of additional late-stage trials

• Reported R&D Expense in Q3 2021 included a $1,172m impairment charge
• Core R&D-to-Total Revenue ratio of 21% (Q3 2021: 22%)

• Addition of Alexion†
• Market development activities for recent launches, including Evusheld
• Core SG&A-to-Total Revenue ratio of 29% (Q3 2021: 29%)

• Includes income from royalties and prior transactions
• See Gross Margin and Expenses commentary above

• Foreign exchange movements
• Interest rate increase on floating rate liabilities

• Reported impacted by discount unwind on acquisition-related liabilities
• 18% Core Tax Rate in the quarter reflected geographical mix of profits and favourable adjustments to prior year tax liabilities in a number of major jurisdictions
• Reported affected by a $883m deferred tax credit arising from a legal entity reorganisation to integrate Alexion
• Variations in the tax rate can be expected to continue quarter to quarter
• Further details of differences between Reported and Core are shown in Table 12

• Alexion was incorporated into the Group's results from 21 July 2021, hence Alexion operations contributed 72 days of revenues and costs in AstraZeneca's Q3 2021 results, compared to 92 days in Q3 2022.

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Table 3: Pipeline highlights since prior results announcement

Event	Medicine	Indication / Trial	Event
	Tagrisso	NSCLC (adjuvant) (ADAURA)	Regulatory approval (JP)
	Imfinzi	Biliary tract cancer (TOPAZ-1)	Regulatory approval (US)
	Imfinzi	Liver cancer (1st-line) (HIMALAYA)	Regulatory approval (US)
	Lynparza	gBRCA23 breast cancer (adjuvant)	Regulatory approval (EU, JP)
	(OlympiA)
	Lynparza	HRD24-positive advanced ovarian	Regulatory approval (CN)
	cancer (1st-line maint.) (PAOLA-1)
	Enhertu	HER2-low breast cancer (3rd-line)	Regulatory approval (US)
	(DESTINY-Breast04)
Regulatory	Enhertu	HER2m25 NSCLC (2nd-line+)	Regulatory approval (US)
approvals and	(DESTINY-Lung02)
other regulatory	Calquence	Maleate tablet formulation	Regulatory approval (US)
actions	Forxiga	CKD26 (DAPA-CKD)	Regulatory approval (CN)
	Tezspire	Severe asthma (NAVIGATOR)	Regulatory approval (EU, JP)
	Beyfortus	RSV (MELODY/MEDLEY)	Regulatory approval (EU)
	Evusheld	COVID-19 (PROVENT/TACKLE)	Regulatory approval (JP)
	Evusheld	COVID-19 (TACKLE)	Regulatory approval (EU)
	Soliris	PNH and aHUS27	Regulatory approval (CN)
	Ultomiris	gMG (CHAMPION-MG)	Regulatory approval (EU, JP)
	Koselugo	NF1-PN28 (SPRINT)	Regulatory approval (JP)
Regulatory	Lynparza	Prostate cancer (1st-line) (PROpel)	Priority Review (US)
Enhertu	HER2-low breast cancer (3rd-line)	Regulatory submission (CN)
submissions
(DESTINY-Breast04)
or acceptances
Farxiga/Forxiga	HFpEF29 (DELIVER)	Regulatory submission (US, EU, JP, CN)
	Ultomiris	NMOSD30 (CHAMPION-NMOSD)	Regulatory submission (US, EU, JP)
	capivasertib	HR+/HER2-neg breast cancer (1st-line)	Primary endpoint met
		(CAPItello-291)
Major Phase III	monalizumab	Recurrent or metastatic HNSCC31	Efficacy threshold not met
(2nd-line)(INTERLINK-1)
data readouts
		One of two dual-primary endpoints not
and other	Fasenra	EoE32 (MESSINA)
met
developments
Soliris	Guillain-Barré syndrome	Primary endpoint not met
	danicopan	PNH with extravascular haemolysis	Primary endpoint met

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