AstraZeneca Beats on Q3 Earnings, Ups 2024 View, to Invest $3.5B in US

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AstraZeneca’s AZN third-quarter 2024 core earnings of $1.04 per American depositary share (ADS) beat the Zacks Consensus Estimate of $1.01 per share. Core earnings of $2.08 per share fell 20% year over year on a reported basis and 27% at constant exchange rates (CER).

Total revenues of $13.57 billion rose 18% on a reported basis and 21% at CER, driven by higher product sales and alliance revenues from partnered medicines. Revenues also beat the Zacks Consensus Estimate of $13.04 billion.

All growth rates mentioned below are on a year-over-year basis and at CER.

AZN’s Product Sales, Alliance & Collaboration Revenues

Product sales rose 20% to $12.95 billion, driven by strong underlying demand trends for its medicines, mainly cancer and rare disease drugs.

Among AstraZeneca’s various therapeutic areas, Oncology product sales were up 22%, while Cardiovascular, Renal and Metabolism (CVRM) product sales rose 20%. The Respiratory & Immunology (R&I) segment rose 29%. Vaccines & Immune (V&I) therapies sales rose 49%. Rare disease product sales were up 11%. Sales of other medicines were down 8%.

Collaboration revenues were $59 million in the quarter, down 40%. Alliance revenues rose 50% to $559 million, driven by continued revenue growth from partnered medicines.

Alliance revenues included $361 million from Daiichi Sankyo for Enhertu and $123 million of AstraZeneca’s share of gross profits in the United States from partner Amgen AMGN for Tezspire.

Alliance revenues also included $49 million for Beyfortus. AstraZeneca records 50% share of gross profits on sales of Beyfortus in major markets outside the United States and 25% of brand revenues in rest of world markets received from partner Sanofi SNY as Alliance revenues. It also records Beyfortus product sales from products supplied to partner Sanofi under the Vaccines & Immune Therapies segment.

AZN’s Most Key Oncology Drugs Outperform

In Oncology, Tagrisso recorded sales of $1.67 billion, up 17% year over year, on strong demand as a first-line and adjuvant treatment. Tagrisso sales beat the Zacks Consensus Estimate of $1.63 billion as well as our model estimate of $1.64 billion.

Lynparza total revenues rose 13% to $778 million, driven by increased market share/demand growth for all approved indications. Lynparza sales also benefited from volume growth in China, driven by increased market share. Lynparza sales beat the Zacks Consensus Estimate and our estimate of $760 million and $760.5 million, respectively

Imfinzi generated sales of $1.20 billion in the quarter, up 16%, driven by demand growth across all approved indications, partially offset by mandatory price reductions in Japan. Imfinzi sales missed the Zacks Consensus Estimate of $1.23 billion and our estimate of $1.22 billion.

Calquence generated sales of $813 million in the quarter, up 25% year over year, benefiting from continued new patient share gains in frontline CLL across the United States and Europe.

The new breast cancer drug Truqap (capivasertib), approved in November 2023, recorded $125 million in revenues in the third quarter of 2024 compared with $92 million in revenues in the previous quarter.

AZN’s CVRM Segment Performance

In CVRM, Farxiga recorded product sales of $1.94 billion in the quarter, up 27% year over year, reflecting accelerated volume growth. The label expansion approvals for heart failure and chronic kidney disease (CKD) indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing solid growth despite generic competition in some markets. However, generic competition in Canada hurt sales. Farxiga sales beat the Zacks Consensus Estimate of $1.89 billion and our model estimate of $1.81 billion.

Brilinta/Brilique sales were $327 million in the reported quarter, down 1%.

New drug Wainua generated $23 million in product sales in the quarter compared with $16 million in the previous quarter.

AZN’s R&I Segment Performance

In R&I, Symbicort sales rose 31% in the quarter to $705 million, driven by strong underlying demand in the United States and Emerging markets, which offset the impact of generic erosion in Europe and Japan. Symbicort sales beat the Zacks Consensus Estimate of $561 million as well as our model estimate of 545.8 million. Pulmicort sales declined 4% to $138 million.

Fasenra recorded sales of $436 million in the quarter, up 13% year over year, driven by strong demand growth and market share gains. The drug’s sales beat the Zacks Consensus Estimate of $416 million and our model estimate of $402 million.

Tezspire recorded total revenues of $191 million compared with $160 million in the previous quarter. Amgen records product sales in the United States and AstraZeneca records its share of U.S. gross profits as Alliance revenues. AstraZeneca books Product Sales in markets outside the United States.

AZN’s Rare Disease, V&I & Other Segment

In the Rare Disease portfolio, Soliris recorded sales of $606 million, down 18% year over year due to conversion to Ultomiris. The drug’s sales missed the Zacks Consensus Estimate as well as our model estimate of $661 million.

Ultomiris revenues were $1.03 billion, up 35%, driven by patient demand, growth in neurology indications, geographic expansions in new markets and continued conversion from Soliris.

In Other Medicines, sales of Nexium declined 8% to $216 million.

In Vaccines & Immune Therapies, AstraZeneca recorded $238 million as revenues from Beyfortus, which included alliance revenues mentioned earlier as well as sales of manufactured Beyfortus product to Sanofi.

AZN Ups 2024 Guidance

AstraZeneca raised its sales and earnings growth expectations for the year. It expects total revenues and core earnings per share to increase by a high teens percentage compared with the previous guidance of an increase in the mid-teens percentage at CER.

Foreign exchange is still expected to have a low single-digit percentage adverse impact on total revenues and a mid-single-digit percentage adverse impact on core EPS in 2024.

Our Take on AZN’s Q3 Results

AstraZeneca’s third-quarter results were better than expected, as it beat estimates for earnings as well as sales. Revenues rose across all segments with sales of most of the key drugs, including Tagrisso, Fasenra, Farxiga, Lynparza and Symbicort beating estimates. Based on a strong performance this year and increasing confidence in achieving certain sales-based milestones, management raised its top- and bottom-line guidance for the second time this year.

AstraZeneca also announced that it plans to invest $3.5 billion by 2026 to expand R&D and manufacturing footprint in the United States. This includes a new capital investment of $2 billion that will create more than 1,000 jobs.

Shares of AstraZeneca were down 1.2% in pre-market trading on Tuesday despite the earnings beat and guidance raise.

Year to date, the stock has declined 3.8% against the industry’s 11.5% rise.

Recently, there have been rising concerns over the ongoing investigations in China, which seem to have overshadowed the company’s strong quarterly performance. The China issues resulted in AZN stock declining 9% this month. Last week, AstraZeneca said that the president of its China subsidiary, Leon Wang, is under investigation by Chinese authorities. With respect to the investigations, chief executive officer, Pascal Soriot, said that the company is aware that Chinese authorities are investigating some current and former AstraZeneca employees for medical insurance fraud, illegal drug importation and personal information breaches. The company went on to say that it has not received any notification about investigations on AstraZeneca China. Some more commentary is expected on the conference call.

Overall, AstraZeneca’s blockbuster medicines, including Tagrisso, Fasenra, Farxiga, Imfinzi, Lynparza, Soliris and Ultomiris, are driving the company’s top and bottom-line growth, backed by increasing demand trends. The company is confident that the growth will continue in 2025.

Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. AstraZeneca expects to generate $80 billion in total revenues by 2030. By the said time frame, AstraZeneca plans to launch 20 new medicines. It believes that many of these new medicines will have the potential to generate more than $5 billion in peak-year revenues. The company is also on target to achieve a mid-30s percentage core operating margin by 2026.

AZN’s Zacks Rank

Currently, AstraZeneca has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AstraZeneca PLC Price and Consensus

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AstraZeneca Expands U.S. Investment Plan — 3rd Update

Dow Jones Newswires

AstraZeneca

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By Helena Smolak and Joseph Walker

AstraZeneca said it plans to pump $2 billion in new investment into the U.S., one of the first major foreign companies to commit significant new spending to the country after Donald Trump's election win.

The decision to go ahead with the spending — earmarked for new manufacturing capacity and research and development — came in response to the U.S. election result, according to a person familiar with the move. AstraZeneca's new U.S. spending also leaves in doubt the pharmaceutical company's plans to invest in a vaccine site in Liverpool, in the U.K., the person said.

AstraZeneca Chief Executive Pascal Soriot told reporters the investment was long planned but that it was accelerated partly because of hope that the U.S. economy "will benefit from some of the policies that will be put in place" there.

"We think that the economy will continue to grow like, you know, many people seem to believe, and that will drive investments in innovation in many fields," he said.

The company said it aims to expand its U.S. presence by the end of 2026. The new spending will be for a research-and-development center in Cambridge, Mass.; manufacturing plants in Maryland and Texas, and other sites across the West and East Coasts, creating more than 1,000 jobs.

The person familiar with the new investment said it came amid hope for changes to the Biden-era legislation called the Inflation Reduction Act, parts of which are aimed at lowering drug prices. The industry has complained that it could lower its ability to spend on research and development.

But Soriot, in his comments to reporters, said he didn't think the IRA would be repealed. "The IRA is here to stay, of course," he said. "And I don't think we, I mean, we're not hoping for any specific upside to the industry in terms of policy."

The new investment comes as businesses worldwide weigh the impact of President-elect Trump's victory in last week's election and prepare for potential changes that his incoming administration could introduce in areas ranging from trade to environmental regulation.

The investment would build on funding AstraZeneca had previously committed to the U.S. and takes the total amount the company plans to spend to $3.5 billion.

AstraZeneca called this the first in a series of steps toward its revenue target of $80 billion by 2030 set earlier this year.

In March, AstraZeneca set out plans to invest 650 million pounds ($836.4 million) in the U.K. But the company remains in talks with the U.K. government to figure out what type of incentives there might be, Chief Financial Officer Aradhana Sarin said in a call with reporters.

The bet on the U.S., AstraZeneca's largest market, comes as the pharmaceutical giant's business in China, another key market, is in the spotlight due to a number of investigations by Chinese authorities into current and former employees. The company said it hasn't received any indication that it itself is under investigation

"We take the matters in China very seriously," Soriot said. "If requested we will fully cooperate with the authorities."

AstraZeneca last week said its China head, Leon Wang, was detained. The company isn't in contact with Wang, Soriot said.

The company previously said it believes Chinese authorities are probing allegations that employees illegally imported breast-cancer drug Enhertu and liver-cancer treatment Imjudo from Hong Kong, and improperly collected patient data.

The probes have weighed on the company's shares.

The Cambridge, England-headquartered company now expects both its 2024 core earnings per share and total revenue to grow by a high teens percentage, from a mid-teens percentage previously, both at constant currencies. This was the company's second guidance lift in as many quarters.

Quarterly net profit rose to $1.43 billion from $1.37 billion, on revenue that rose to $13.57 billion from $11.49 billion.

Write to Helena Smolak at helena.smolak@wsj.com and Joseph Walker at joseph.walker@wsj.com.

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Trending: AstraZeneca Expands Its Investment Plan in the U.S.

Dow Jones Newswires

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AstraZeneca is one of the most mentioned companies in the U.S. across all news items in the past 12 hours, according to Factiva data. The United Kingdom-based global biopharmaceutical company said it plans a new investment of $2 billion in the U.S. AstraZeneca, which aims to expand its U.S. presence by the end of 2026, said the new investment would create more than 1,000 jobs. The money would build on funding previously committed to the U.S. and brings the total amount the company plans to spend to $3.5 billion. AstraZeneca said the funds will be deployed to a research-and-development center in Cambridge, Mass.; manufacturing plants in Maryland and Texas, and additional sites across the East and West Coasts. Dow Jones & Co. owns Factiva. (jennifer.tershak@wsj.com)

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