AstraZeneca PLC (LSE:AZN) had a mixed day of news, with the bright spots of a foray into anti-obesity drugs and an upgrade to its full-year outlook somewhat clouded by news about potential lawsuits over its Covid-19 vaccine.
The pharmaceuticals group hiked its revenue and earnings target for the year after reporting a 5% increase in turnover for the year to date to US$33.8 billion, with oncology sales rising by a fifth, but according to analysts, despite some of its blockbuster drugs underperforming.
The second largest company on the FTSE 100 also took a US$2.9 million knock from a slump in Covid-19 medicine sales.
The pharma group’s topline was driven by strong sales of cancer immunotherapy drug Imfini and cancer medicine Imjudo, an antibody drug that works by blocking the protein that controls T-cells, the body’s first line of immunity defence.
“Take some reassurance”
“The market should take some reassurance from the strong commercial and clinical progress being made,” said Derren Nathan, head of equity research at Hargreaves Lansdown. “Astra has an outstanding track record of delivering novel therapies.”
The pharma giant today announced a licence agreement with Chinese company Eccogene for obesity drug, ECC5004, an orally administered medicine based on glycogen peptide 1 (GLP-1) that could rival Ozempic and Wegovy.
If AstraZeneca is successful at capturing business in the weight loss market, which propelled Novo Nordisk (NYSE:NVO) to become the largest stock in the European equity market, then the approximately US$1.8 billion price tag for licensing Eccogene’s treatment in future “may be worth it”, said Nathan.
Preliminary results from the first phase of clinical trials show "good tolerability" and “encouraging” weight reduction compared to a placebo, the pharma group said today.
“The idea of a magic pill for weight loss, as opposed to the current injectable options in the class, clearly has its commercial attractions,” Nathan said. “But given it’s still in phase 1, there is a long path to follow.”
Analysts say the pharma group’s results were broadly in line with market consensus.
Barclays analysts said in a research note that AstraZeneca’s guidance for the full year has been raised in line with their expectations, adding that the results for the third quarter were largely “as we expected”.
They said weakness in the pharma giant’s chemotherapy drug Calquence and cancer treatment Lynparza was offset elsewhere including by Imfini and Imjudo, noting that it has initiated the third phase trial of novel cancer immunotherapy Volrustomig.
“Calquence, Lynparza and Tagrisso were all a bit weaker than we'd been forecasting,” Barclays analysts said in a research note.
Quarterly revenues of US$11.5 billion, excluding its Covid-19 drug sales, were slightly below where Barclays had pitched the pharma giant to be but were broadly in line with consensus.
‘Defective’ vaccine claims
Despite increasing its outlook for 2024 for both revenue and core earnings per share growth, the pharma group qualified its guidance by saying turnover would have grown in the low teens without the hit to Covid vaccine sales.
AstraZeneca is facing mounting pressure over its Covid-19 vaccine after two lawsuits were filed in the High Court claiming that the "defective" vaccine caused a fatal neurological condition.
Concerns remain about how AstraZeneca will fare if its chief executive Pascal Soriot does leave the company next year, even though the rumour has been denied, particularly as it faces lawsuits over its Covid-19 vaccine which could lead to millions of pounds of damages.
Some patients developed blood clots after having the jab, which was not spotted in the first clinical trials, which in certain cases led to brain haemorrhage and permanent brain damage.
If that lawsuit is successful, the company could be liable to pay out £1 million to sufferers. However, if UK victims follow suit then the payout is expected to rise to more than £80 million with an additional £20 million of damages estimated on top of that for disability claims, according to reports.
The pharma group, however, signed an indemnity insurance agreement with the government to expedite sales that could ultimately leave the taxpayer, rather than the pharma group, liable.