AstraZeneca plc (AZN) 2 ADRs Rpr 1 Ord USD0.25
HL comment (9 November 2017)
Astra continues to rely on externalisation revenues from the sale of non-core assets to support revenue growth, with product sales declining. Core operating profit in the quarter rose 9% to $1.9bn. Management expect full year earnings per share to be towards the favourable end of previous guidance, falling by a low to mid-teens percentage.
The shares rose 2.8% following the announcement.
HL View to follow
Third Quarter Results (Constant Exchange Rates)
Product sales of $4.9bn in the third quarter were 3% lower than this time last year, 2% at constant exchange rates (CER). However, total revenue rose 10% at CER, as the group delivered $1.4bn of externalisation revenue.
Externalisation benefitted from the deal with MSD to cooperate on cancer treatment Lynparza, which generated a $997m upfront payment. The deal has the potential to generate up to $6.9bn of revenues in the future if certain milestones are met.
Cost control remains impressive, with year-to-date Core R&D expenditure falling 2% and Selling, General & Administrative costs down 5%, hitting $4bn and $5.7bn respectively.
Astra's growth platforms grew 4% year on year, accounting for 60% of total revenue. The new Cardiovascular and Metabolic diseases and new Oncology businesses grew particularly well. In Q3, Oncology revenues rose 73% higher, with COPD treatment Brillinta growing 36%.
Astra's pipeline has made good progress in the quarter, with seven drugs receiving regulatory approval, mainly in cardiology and oncology, while the group has also reported positive results from two clinical trials.
The group finished the period with net debt of $12.1bn, compared to $13.4bn this time last year.
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