Astrazeneca Regulatory News (AZN)

AstraZeneca PLC

Q1 2015 Results

24 April 2015

Results support reiterated 2015 guidance.

Delivery of a focused, accelerated and science-based pipeline continues.

Financial Summary

· Total Revenue grew by 1%

· Core EPS declined by 3%; investment in scientific leadership maintained

· Reported Operating Profit grew by 15%

Commercial Highlights

The focus on further externalisation continued, including a US co-commercialisation agreement for Movantik. Growth platforms grew by 13%, representing 56% of Total Revenue:

1. Brilinta/Brilique: +45%. Publication of encouraging PEGASUS data at the ACC conference last month

2. Diabetes: +47%. Particularly good growth for Farxiga/Forxiga 

3. Respiratory: +7%. Symbicort stable as expected with Pulmicort delivering a strong performance

4. Emerging Markets: +18%. China +28%, where Respiratory sales were up by 39%

5. Japan: -2%. The final effects of the biennial price cuts impacted Q1 sales

FY 2015 Guidance is unchanged from that provided on 6 March 2015.

Achieving Scientific Leadership

Pascal Soriot, Chief Executive Officer, commenting on the results said:

"Our encouraging performance in the quarter supports our full year guidance. Total Revenue grew by 1%, with the growth platforms representing 56%, after particularly strong results in Emerging Markets and with Brilinta/Brilique. Our co-commercialisation agreement for Movantik in the US was a good illustration of how we will bring important medicines to patients and externalisation value to our shareholders.

"Our pipeline progressed well in each of our therapy areas. Highlights included the positive top-line results from the Phase III PINNACLE programme for our respiratory medicine PT003 and data from the PEGASUS study for Brilinta/Brilique in cardiovascular disease. We received two submission acceptances for new medicines, two FDA Orphan-Drug and two Fast-Track designations. We look forward to presenting data through the year.

"We also continued to reinforce our Oncology franchise and now have 72 trials underway, including 31 in Immuno-Oncology. The latest AZD9291 data, which showed strong clinical benefit of 13.5 months progression-free survival, and the Fast-Track designation by the FDA for MEDI4736, both for patients with lung cancer, illustrate the rapid progress we are making in this area. Our strategic collaboration with Celgene, a leader in haematology, will maximise the potential of our Immuno-Oncology assets in the very important haematology indications, and our collaboration with Innate Pharma will further strengthen our Immuno-Oncology franchise."

Notes

1. All growth rates are shown at constant exchange rates (CER) unless specified otherwise.

2. Total Revenue defined as Product Sales and Externalisation Revenue. For further details on the presentation of Total Revenue, see the announcement published by the Company on 6 March 2015.

3. See Operating and Financial Review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

4. Brodalumab developed in collaboration with Amgen who will be responsible for regulatory submission.

Results Presentation

A conference call and audio webcast for investors and analysts, hosted by management, will start at midday BST today. The webcast can be accessed via www.astrazeneca.com/investors.

Reporting Calendar

The Company intends to publish its half year and second quarter financial results on 30 July 2015.

About AstraZeneca

AstraZeneca is a global, innovation-driven biopharmaceutical business that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of cardiovascular, metabolic, respiratory, inflammation, autoimmune, oncology, infection and neuroscience diseases. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.

Research and Development Update

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A comprehensive update of the AstraZeneca development pipeline is presented in conjunction with this announcement and can be found later in this announcement.

Highlights since the prior results announcement on 5 February 2015:

Key: LCM - life-cycle management.

In 2015-2016 AstraZeneca anticipates 12-16 Phase II starts, 14-16 NME and major line-extension regulatory submissions and 8-10 NME and major line-extension approvals.

There has been notable progress since the last update; highlights are included below. This near-term progress reinforces the longer-term sustainability of the pipeline, supported by a continued shift in focus from rebuilding the late-stage pipeline to regulatory submissions and approvals, whilst continuing to transition high-quality programmes to late stage as rapidly as possible.

1. Respiratory, Inflammation and Autoimmunity (RIA)

Significant progress was made across the RIA pipeline, which included five programmes in pivotal studies or registration. AstraZeneca holds a unique position in respiratory disease, including asthma, chronic obstructive pulmonary disease (COPD) and idiopathic pulmonary fibrosis (IPF), with a range of differentiated potential medicines in development by leveraging novel combinations, biologics and devices. The pipeline also has several promising assets in inflammatory and autoimmune disease areas such as dermatology, gout, systemic lupus, rheumatoid and psoriatic arthritis.

Lesinurad (SURI)

On 12 March 2015 the US Food and Drug Administration (FDA) notified AstraZeneca that it considered the new drug application (NDA) for lesinurad 200mg tablets sufficiently complete to permit a substantive review. The Prescription Drug User Fee Act (PDUFA) goal date is in the fourth quarter. Lesinurad is a selective uric acid re-absorption inhibitor (SURI) developed for the chronic treatment of hyperuricaemia in combination with xanthine oxidase (XO) inhibitors allopurinol or febuxostat in gout patients, when additional therapy is warranted. Between 40 to 80% of patients do not achieve recommended serum uric acid (sUA) goals with the current standard of care of an XO inhibitor alone. AstraZeneca's combination with lesinurad effectively lowers sUA and enables significantly more patients to achieve and maintain target treatment goals to control their disease.

PT003 (LAMA/LABA)

On 18 March 2015 AstraZeneca announced positive top-line results from the Phase III PINNACLE programme, which showed the potential of PT003 as a novel treatment for improving lung function in patients suffering the chronic symptoms of COPD. AstraZeneca's ability to deliver a unique LAMA/LABA formulation in a single pressurised metered dose inhaler (pMDI) is important for helping some 30% of patients around the world who use an aerosol device.

The successful completion of the PINNACLE 1 and 2 studies marks the first Phase III results from a series of pipeline candidates under development by AstraZeneca using Pearl Therapeutics' novel formulation technology.

Anifrolumab (MEDI-546)

The Company has been exploring interferon (IFN) inhibition in moderate to severe systemic lupus erythematosus (SLE or lupus) via two different approaches in Phase IIb trials, both of which highlight the promise of the Type 1 IFN pathway in treating lupus. Sifalimumab (MEDI-545) binds to interferon-α to block IFN-α signalling through the Type 1 IFN receptor complex. Anifrolumab (MEDI-546) binds to subunit 1 of the Type 1 IFN receptor, inhibiting activity of all Type 1 IFNs.

In a recent Phase IIb trial, anifrolumab met the primary endpoint of reduction in global disease activity score (SRI-4) at six months, with responders also tapering to

2. Cardiovascular and Metabolic Disease (CVMD)

AstraZeneca's strategy in CVMD focuses on ways to reduce morbidity, mortality and organ damage by addressing multiple risk factors across cardiovascular disease, diabetes and chronic kidney disease indications. The patient-centric approach is reinforced by science-led life-cycle management programmes and technologies, including early research into regenerative methods.

Brilinta/Brilique

On 14 March 2015 AstraZeneca announced detailed results from the PEGASUS-TIMI 54 study, which showed that long-term treatment with Brilinta/Brilique 60mg and 90mg tablets twice-daily plus low-dose aspirin reduced thrombotic cardiovascular events in patients with a history of heart attack, compared to placebo. The Company has submitted regulatory filings to the European Medicines Agency and the FDA and looks forward to working with these agencies towards a potential new indication in major markets.

For patients more than one year on from a heart attack, the current standard of care is aspirin alone. Coupled with the PLATO study, PEGASUS-TIMI 54 provides consistent evidence of the benefit Brilinta/Brilique can bring to patients with coronary artery disease in acute and chronic secondary prevention.

On 30 March 2015 the FDA approved a new administration option for acute coronary syndrome patients who are unable to swallow Brilinta 90mg tablets whole. Unlike other P2Y12 inhibitors, Brilinta received FDA approval to be crushed and administered in water by swallowing or via nasogastric tube.

AstraZeneca is committed to enhancing scientific understanding of the role of Brilinta/Brilique in a wide range of cardiovascular disorders, including stroke, myocardial infarction and peripheral arterial disease through PARTHENON, the Company's largest ever cardiovascular outcomes programme involving nearly 80,000 patients.

Onglyza SAVOR Study: FDA Advisory Committee Meeting

The FDA Endocrinologic and Metabolic Drugs Advisory Committee voted on 14 April 2015 that the results of the Saxagliptin Assessment of Vascular Outcomes Recorded in Patients with Diabetes Mellitus (SAVOR) study demonstrated that the use of saxagliptin in patients with Type-2 diabetes has an acceptable cardiovascular risk profile. The Committee recommended that the FDA supplement the medicine's labelling to add new safety information.

AstraZeneca will also conduct further investigation to better understand the signal of hospitalisation for heart failure found in the SAVOR results.

SAVOR met the primary safety objective, demonstrating that Onglyza did not increase the risk for cardiovascular death, non-fatal myocardial infarction and non-fatal ischemic stroke when added to a patient's current standard of care, with or without other anti-diabetic therapies, as compared to placebo. The supplemental New Drug Applications (sNDAs), based on the SAVOR results, if approved, will provide prescribers and patients with important additional information about the benefit-risk profile of Onglyza and Kombiglyze XR.

3. Oncology

AstraZeneca's vision in Oncology is to help patients by redefining the cancer-treatment paradigm, with the aim of bringing six new cancer medicines to patients by the year 2020. A broad pipeline of next-generation medicines is focused principally on four disease areas - breast, ovarian, lung and haematological cancers. The Company is also exploring other tumour types where there is unmet medical need. These are being targeted through four key platforms - immunotherapy, the genetic drivers of cancer and resistance, DNA-damage repair, and antibody drug conjugates, underpinned by personalised healthcare and biomarker technologies. Today there are six AstraZeneca Oncology NMEs in pivotal studies or under regulatory review.

Iressa Label Update in China

On 2 March 2015 the China Food and Drug Administration (CFDA) approved an update to the Iressa (gefitinib) label to include blood-based diagnostics. The decision means that Iressa is now the first tyrosine kinase inhibitor (TKI) in China to include blood-based diagnostics on its label. Tumour samples gained through biopsy are the primary method for determining a patient's epidermal growth factor receptor (EGFR) mutation status. However almost a quarter of patients with locally advanced or metastatic Non Small Cell Lung Cancer (NSCLC) do not have an available or evaluable tumour sample for this method of testing and are therefore ineligible to receive treatment with Iressa. Based on the CFDA decision, doctors will be able to use circulating-tumour DNA obtained from a blood sample to identify lung-cancer patients who are eligible to receive Iressa.

AZD9291 (EGFR)

In March 2015 the first patient was dosed in the FLAURA study of AZD9291 as a potential treatment for first-line EGFR-mutated NSCLC. FLAURA is a Phase III study designed to assess the safety and efficacy of AZD9291 versus a standard of care EGFR-TKI (gefitinib and erlotinib).

AZD9291 is on track for a Q2 2015 regulatory submission for the treatment of patients with advanced EGFR-mutated NSCLC who also have the T790M resistance mutation after the failure of standard first-line anti-EGFR treatment.

European Lung Cancer Conference, 15-18 April 2015

On 17 April 2015 AstraZeneca announced latest data from the ongoing AURA study of AZD9291 in patients with advanced epidermal growth factor receptor mutation-positive (EGFRm) NSCLC, who also have the T790M-resistance mutation. The data demonstrated a median progression-free survival of 13.5 months (95% confidence interval (CI), 8.3 months to not calculable (NC)).

Selumetinib Granted Orphan-Drug Designation

On 17 April 2015 AstraZeneca announced that the FDA has granted Orphan-Drug designation for the MEK inhibitor, selumetinib, in the treatment of uveal melanoma. Uveal melanoma is a rare disease in which cancer cells form in the tissues of the eye. It is the most common primary intraocular malignancy in adults and comprises 5% of all melanomas. The Orphan-Drug designation programme provides orphan status to drugs and biologics which are defined as those intended for the safe and effective treatment, diagnosis or prevention of rare diseases or disorders that affect fewer than 200,000 people in the US.

Selumetinib inhibits the MEK pathway in cancer cells to prevent the tumour from growing. Data from a Phase III study evaluating selumetinib in combination with chemotherapy in patients with first-line metastatic uveal melanoma is expected to be available later this year. In addition to uveal melanoma, selumetinib is being investigated in Phase III studies in KRAS mutation-positive lung cancer and thyroid cancer and in Phase II in children with neurofibromatosis Type 1.

Tremelimumab (CTLA-4) Granted Orphan-Drug Designation

On 15 April 2015 AstraZeneca announced that the FDA had granted Orphan-Drug designation for the anti-CTLA-4 monoclonal antibody, tremelimumab, for the treatment of malignant mesothelioma. Mesothelioma is a rare, aggressive cancer that affects the lining of the lungs and abdomen. Available treatments for mesothelioma are very limited, particularly for patients with advanced disease.

Tremelimumab is currently being investigated in a pivotal Phase II randomised study for the potential use as a second-line treatment in patients with undetectable pleural or peritoneal malignant mesothelioma. Detailed results from this study are expected this year.

MEDI4736 (PD-L1) Clinical Trials Update 

The FDA recently granted Fast-Track designation to the investigation of the anti-PD-L1 monoclonal antibody MEDI4736 as a monotherapy treatment for certain patients with advanced NSCLC, who have received at least two prior systemic-treatment regimens, do not have EGFR mutations or anaplastic lymphoma kinase (ALK) alterations, and have tumours that are determined to be PD-L1 positive. Fast-Track programmes are designed to facilitate the development and expedite the review of new drugs that are intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs.

MEDI4736 is being investigated as a monotherapy in NSCLC and squamous cell carcinoma of head and neck cancer (SCCHN). ATLANTIC, a Phase II trial in third-line PD-L1 positive metastatic NSCLC, is on track to deliver data in 2015 and could potentially, if positive, support a regulatory submission. Additional trials include PACIFIC, a Phase III trial in locally-advanced unresectable NSCLC, ADJUVANT, a Phase III trial in adjuvant NSCLC, and HAWK, a Phase II trial in second-line PD-L1 positive metastatic SCCHN (all recruiting patients). In addition, ARCTIC, a Phase III trial in third-line metastatic NSCLC contains a monotherapy sub-study for PD-L1 positive patients and is recruiting patients.

MEDI4736 is also being tested as a concurrent combination treatment with tremelimumab in NSCLC and SCCHN. ARCTIC contains a substudy for PD-L1 negative patients. Data on dosing selection and scheduling will be presented at the upcoming ASCO meeting. In addition, EAGLE, a Phase III trial and CONDOR, a Phase II trial (both in SCCHN) are being initiated. Several further internal-combination trials are ongoing with MEDI4736, including combinations in NSCLC with Iressa (gefitinib), AZD9291 and selumetinib.

Pharmacyclics and AstraZeneca have begun PCYC-1135-CA, a multi-centre study that will investigate the use of ibrutinib (Imbruvica) in combination with MEDI4736. The Phase Ib/II study will examine the safety, tolerability and effectiveness of this investigational combination in individuals with relapsed or refractory NSCLC, breast cancer, and pancreatic cancer.

American Association for Cancer Research (AACR), 18-22 April 2015

During the AACR annual meeting in Philadelphia, AstraZeneca and MedImmune presented 62 scientific abstracts, of which 15 were oral presentations. These abstracts demonstrated the strength and depth of the early-stage Oncology pipeline in AstraZeneca and MedImmune.

Key presentations at AACR included:

- Data showing activity of investigational compounds targeting key molecular pathways including OX40, CD73, PI3K, AKT, mTOR, EGFR, SERD and PARP

- Pre-clinical data on the potential combination of AZD9291 and savolitinib (AZD6094, previously known as volitinib) to prevent and treat newly-identified forms of resistance in EGFR-mutated NSCLC

- Data on AZD9496, a novel, selective oestrogen receptor down-regulator (SERD) being studied as a potential treatment for patients with oestrogen receptor positive (ER+) breast cancer

- Other key data presented at AACR were from clinical trials exploring combinations of AZD2014, a novel dual TORC1/2 kinase inhibitor, with Faslodex in ER+ breast cancer and with chemotherapy in ovarian and lung cancer and pre-clinical research on combination regimens

American Society of Clinical Oncology (ASCO) Meeting, 29 May-2 June 2015

AstraZeneca will host an investor science event during the ASCO meeting to be held in Chicago, US on 1 June 2015 at 20:30 CDT. Further details will be available at www.astrazeneca.com/investors in due course.

4. Infection, Neuroscience and Gastrointestinal

MEDI8897 Fast-Track Designation

MedImmune has received Fast-Track designation from the FDA for the development of MEDI8897, an investigational, high-potency, extended half-life monoclonal antibody (MAb) engineered to prevent lower-respiratory tract infection caused by respiratory syncytial virus (RSV) in infants and young children.

RSV is the most prevalent cause of lower respiratory tract infections among infants and young children, resulting in annual epidemics worldwide. MedImmune is the only company to have discovered, developed and marketed a monoclonal antibody for severe RSV. This is the third Fast-Track designation MedImmune has received in the last six months for its investigational molecules in its Infectious Disease therapy area.

Scientific Collaborations

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On 25 March 2015 AstraZeneca announced that it had entered a five-year research collaboration with the Harvard Stem Cell Institute to develop a technique that creates human beta cells from stem cells for use in screens of AstraZeneca's compound library in the search for new treatments for diabetes, one of AstraZeneca's key platforms as part of its strategy to return to growth.

On 26 March 2015 AstraZeneca announced that it had joined a public-private consortium with Genomics England to accelerate the development of new diagnostics and treatments arising from the 100,000 Genomes Project. The GENE Consortium (Genomics Network for Enterprises Consortium) is a unique partnership between industry, academia and the National Health Service Genomic Medicine Centres, which aims to transform treatment for patients with cancer and rare diseases, providing faster access to the right therapy and personalised healthcare, establishing the UK as a world leader in this field. AstraZeneca will gain insights into the evolving area of genome science with a view to identifying new genes and biomarkers which could lead to the development of innovative diagnostics and treatments.

Corporate and Business Development

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Completion of Actavis Transaction in Respiratory Disease

On 3 March 2015 AstraZeneca completed the acquisition of the rights to Actavis Plc's (Actavis) branded respiratory business in the US and Canada. The transaction strengthens AstraZeneca's respiratory franchise globally and builds on the acquisition of Almirall SA's respiratory portfolio in 2014 by extending the Company's development and commercialisation rights into the US for both Tudorza Pressair and Duaklir Genuair. The transaction also augments AstraZeneca's respiratory franchise with the Actavis oral product, Daliresp.

Immuno-Oncology Clinical Trial Collaboration with Immunocore

On 16 April 2015 AstraZeneca announced that MedImmune has entered into a collaboration to conduct clinical trials in immuno-oncology with Immunocore Limited (Immunocore), a privately-held UK-based biotechnology company. Under the terms of the agreement, Immunocore will conduct a Phase Ib/II clinical trial combining MedImmune's investigational checkpoint inhibitors MEDI4736 and tremelimumab, with IMCgp100, Immunocore's lead T-cell receptor based therapeutic, for the potential treatment of patients with late-stage metastatic melanoma.

Agreement with Janssen to Test AZD8186 in Combination with Abiraterone in Prostate Cancer

AstraZeneca has entered an agreement with Janssen Research & Development, LLC (Janssen) to conduct a Phase I/IIa study to explore the combination of AstraZeneca's AZD8186 (PI3 kinase beta inhibitor) together with Janssen's Zytiga (abiraterone acetate). The two compounds block complementary molecular pathways in prostate cancer and so have synergistic effects which could help to overcome resistance to monotherapy and improve the benefit-risk profile of either compound alone. The combination will be tested for the treatment of prostate tumours that lack the protein PTEN, a condition that represents a relatively large unmet medical need.

Agreement with Gilead to Test MEDI4736 in Combination with Zydelig in Haematological Cancers or Solid Tumours

AstraZeneca has entered an agreement to conduct a Phase I/II study to explore AstraZeneca's MEDI4736, in combination with Gilead Sciences, Inc.'s Zydelig (idelalisib), an oral phosphoinositide 3-kinase (PI3K) delta inhibitor. PI3K delta is over-expressed in many B-cell malignancies and plays a role in B-cell viability, proliferation and migration. Inhibition of PI3K delta may also play a role in up-regulating the activity of the immune system against cancers. It is hypothesised that the suppression of PD-L1 and PI3K delta signalling may lead to an enhanced anti-tumour immune response. The study will assess the combination as a treatment for patients with haematological cancers or solid tumours including diffuse large B-cell lymphoma, and triple negative breast cancer.

Agreement with Juno Therapeutics to test MEDI4736 in combination with Novel CAR T Cell in non-Hodgkin's lymphoma

MedImmune has entered into an agreement to evaluate the safety, tolerability and preliminary efficacy of MEDI4736 in combination with one of Juno Therapeutics Inc.'s (Juno) investigational chimeric antigen receptor (CAR) T cell candidates in patients with non-Hodgkin's lymphoma. Juno's CAR T candidates are investigational cell-based immunotherapies that utilise genetically engineered T-cells to recognise and kill cancer cells expressing the CD19 protein. The Phase Ib study will explore the potential clinical benefit of combining these two potent therapeutic classes.

Co-Commercialisation Agreement with Daiichi Sankyo for Movantik in the US

On 19 March 2015 AstraZeneca announced a co-commercialisation agreement with Daiichi Sankyo Co, Ltd. (Daiichi Sankyo) for Movantik (naloxegol) in the US, in line with the strategy of delivering value through its own development and commercial capabilities as well as through external collaboration. Movantik is a first-in-class once-daily oral peripherally-acting mu-opioid receptor antagonist for the treatment of opioid-induced constipation in adults with chronic non-cancer pain. Movantik was approved by the FDA in September 2014. It was descheduled in January 2015 and is no longer labelled as a controlled substance. Movantik was launched in the US at the end of March 2015.

Change in Senior Executive Team

David Smith, Executive Vice-President, Operations and Information Systems will retire from AstraZeneca in mid-2015. His successor in that role will be Pam P. Cheng who will join the Company in June as a member of the Senior Executive Team reporting to the Chief Executive Officer. Pam Cheng has extensive experience in pharmaceutical manufacturing, having spent 14 years in global manufacturing and supply chain roles at Merck & Co, Inc. / Merck Sharp & Dohme Corp. (MSD). More recently she gained experience in commercial operations in her current role as President, MSD China.

Operating and Financial Review

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All narrative on growth and results in this section relates to Core performance, based on constant exchange rates (CER) unless stated otherwise. Financial figures are in $ millions ($m). The performance shown below covers the three months to 31 March 2015 (the quarter) compared to the three months to 31 March 2014 (the first quarter of 2014). Core measures, which are presented in addition to Reported financial information, are non-GAAP measures provided to enhance understanding of the Company's underlying financial performance. Core financial measures are adjusted to exclude certain significant items, such as:

− amortisation and impairment of intangibles, including impairment reversals but excluding any charges relating to IT assets

− charges and provisions related to our global restructuring programmes (this will include such charges that relate to the impact of our global restructuring programmes on our capitalised IT assets)

− other specified items, principally comprising legal settlements and acquisition-related costs, which include fair-value adjustments and the imputed finance charge relating to contingent consideration on business combinations

More detail on the nature of these measures is given on page 72 of the 2014 Annual Report and Form 20-F Information.

Total Revenue

Total Revenue

Total Revenue grew by 1% in the quarter to $6,057m. Based on actual exchange rates, Total Revenue declined by 6% reflecting the particular weakness of key trading currencies against the US dollar. For the first time a new line of Total Revenue has been presented to include both Product Sales and Externalisation Revenue. For further details on the presentation of Total Revenue, see the announcement published by the Company on 6 March 2015.

Product Sales

Product Sales declined by 3% in the quarter reflecting the US market entry of a Nexium generic product from mid-February 2015 as well as an adverse impact from the change in accounting for the US Branded Pharmaceutical Fee of $56m following issuance of final regulations in Q3 2014.

Externalisation Revenue

Externalisation Revenue grew to $309m (Q1 2014: $44m), primarily reflecting income from the co-commercialisation agreement with Daiichi Sankyo for Movantik in the US referred to above ($200m), plus the co-commercialisation of Nexium in Japan ($55m), also with Daiichi Sankyo.

Product Sales

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The performance of a selection of key medicines is shown below.

A geographical split is shown in Note 6.

Product Sales Summary

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During Q3 2014, final regulations relating to the US Branded Pharmaceutical Fee were issued, affecting how the fee is recognised; AstraZeneca consequently now accrues for the obligation as each sale occurs. As the fee is based on actual Product Sales in the current year, the fee is recognised as a deduction from Product Sales rather than a charge to SG&A. As a result, in 2015, Q1 US Product Sales were reduced by $56m, adversely impacting individual brand sales by an average of 2%.

Respiratory, Inflammation and Autoimmunity

Symbicort

Product Sales in the US declined by 1% to $342m with volume growth more than offset by lower net prices and additional access and co-pay assistance. Symbicort's share of total prescriptions for fixed-combination medicines declined by 0.2 percentage points from December 2014 (exit share) to 32.8%, reflecting adverse formulary changes; however, market share grew sequentially over the final two months of the quarter. In Europe Product Sales declined by 8% to $306m, reflecting increased competition from recently launched analogue medicines. This performance contrasts with growth of 40% in Emerging Markets to $98m, notably with 67% growth in China where Product Sales reached $29m.

Pulmicort

Product Sales of Pulmicort in the quarter were $286m, up 17%. Growth was driven primarily by the performance of Pulmicort Respules in Emerging Markets, which were up 33% at $176m. China Product Sales increased by 36% to $142m. On 13 February 2015 the US District Court for the District of New Jersey ruled US Patent No. 7,524,834 ('the '834 patent'), protecting Pulmicort Respules in the US, was invalid. On 16 February 2015 the Company filed an appeal and requested an injunction which was granted by the court. As of today, the injunction remains in place.

Tudorza/Eklira

Product Sales in the quarter were $30m and included $10m in the US following the completion of the acquisition of the Actavis product rights on 3 March 2015.

Cardiovascular and Metabolic Disease

Brilinta/Brilique

Product Sales were $131m, up 45%. Brilinta Product Sales in the US were $46m, up 64%. Total prescriptions for Brilinta in the US were 8% higher versus Q4 2014, while weekly new-to-brand market share increased to 9.3% at the end of March 2015, representing the medicine's largest new-to-brand volume growth since launch. In Europe Brilique continues to perform well, with an increase in Product Sales of 21% to $54m reflecting ACS leadership across many European markets; however the increase in penetration rates is slowing in markets where Brilique holds a high market share. Emerging Markets sales grew by 108% to $23m as the medicine remained in its launch phase.

Onglyza

Product Sales were up 19% in the quarter to $183m. In the US, Onglyza Product Sales were down 8% at $98m driven primarily by destocking and competition in the DPP4 class. Product Sales in the Rest of World (ROW) were $85m, up 70%, with growth in all key markets, notably in Europe where sales achieved $37m, up 72%, including the benefit of the metformin-combination products Komboglyze/Kombiglyze XR.

Bydureon/Byetta

Combined Product Sales in the US were $174m, up 44%. Bydureon total prescriptions grew 25% in the quarter reflecting the launch of the Bydureon Pen in September 2014. ROW Product Sales were $39m, up 22% driven by the Bydureon performance in Europe and the ongoing Pen launch.

Farxiga/Forxiga

In the US, Product Sales were $37m (Q1 2014: $4m) including Xigduo XR, launched in the second half of 2014. Total prescriptions increased 18% versus Q4 2014 reflecting strong market growth, while total prescription exit share in March was 27.2%, a 1.4 percentage-point decline versus Q4 2014 due to unfavourable formulary changes with effect from 1 January 2015. Product Sales grew to $39m in ROW, including Europe at $24m and Emerging Markets at $12m.

Crestor

In the US, Crestor Product Sales declined by 13% to $614m, reflecting lower volumes in line with total prescription share, as well as inventory movements. In Europe Product Sales declined by 5% to $243m, reflecting prevailing competitive trends, whilst Emerging Markets delivered growth of 12% at $178m.

Oncology

Iressa

Product Sales declined by 5% to $144m, primarily a function of the competitive environment in Japan. Emerging Markets grew by 9% with Product Sales of $77m.

Lynparza

Product Sales reached $9m following the launch in the US at the end of 2014. Growth has been driven by the pool of eligible patients awaiting treatment as well as patients newly tested for BRCA.

Zoladex

Product Sales for the quarter were up 3% to $194m. Notable performance included growth of 41% in China where Product Sales reached $30m.

Faslodex

Product Sales for the quarter were up 2% to $161m. A decline in sales in Europe of 8% to $49m was more than offset by 9% growth in the US where Product Sales reached $83m.

Infection, Neuroscience and Gastrointestinal

Nexium

In the US, Product Sales in the quarter were $225m, down 53%. The reduction was primarily driven by the loss of exclusivity in the quarter, which adversely impacted brand volumes by 38% and resulted in an increase to the estimate for pipeline inventory returns to reflect the level of business currently retained. Product Sales in markets outside the US were up 5% to $419m, driven by 33% growth in China to $97m and 23% growth in Japan to $89m, partially offset by 8% declines in other markets where Product Sales reduced to $233m due to increased generic competition.

Synagis

Product Sales in the US were $162m, down 37%. The decline reflected lower demand related to the American Academy of Pediatrics Committee on Infectious Disease guidelines issued in mid-2014. These further restricted patients eligible for preventative therapy with Synagis. While these guidelines were inconsistent with the approved label, demand was significantly impacted. Product Sales were $42m in ROW, down 42% reflecting the phasing of shipments to AbbVie.

Seroquel XR

Product Sales in the US were up 2% to $169m where the performance was mainly driven by a higher underlying net price. Sales of Seroquel XR in the ROW were down 16% to $93m in the quarter, driven primarily by competition from generic products in Europe where sales were down 22% to $63m.

Regional Product Sales

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US

Product Sales were down 14% to $2,169m. Despite growth from brands such as Brilinta, Farxiga and Bydureon, growth was more than offset by the impact of the loss of exclusivity of Nexium as well as by competition facing Crestor from therapeutic substitution by generic statins. This was compounded by the adverse impact of the Synagis guideline changes and the change in accounting related to the Branded Pharmaceutical Fee which further reduced Product Sales by $56m.

Europe

Product Sales were down 5% to $1,340m in the quarter. Growth from Forxiga and Onglyza in Europe was more than offset by continued generic competition facing Crestor and Seroquel XR. Symbicort competed alongside analogues in that market and saw small volume growth. The phasing of Synagis sales this year had an adverse impact in the first quarter.

Established ROW

Product Sales were down 5% in the quarter to $706m. Japan declined by 2% to $455m, driven primarily by the mandated April 2014 biennial price cut, which was partially offset by higher volumes delivered by Nexium and Crestor.

Emerging Markets

Product Sales were up 18% to $1,533m with growth delivered across the Emerging Markets business. China sales increased by 28% to $726m, ahead of in-market growth, with the Company's medicines for respiratory and diabetes delivering particularly strong results.

Financial Performance

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* Gross Margin reflects Gross Profit derived from Product Sales, divided by Product Sales.

Investment Costs

Core R&D investment costs were up 24% to $1,280m, principally as a result of the lower base in the first quarter of 2014, the recent acceleration in the late-stage pipeline, and additional costs incurred on assets acquired through business and corporate development activities. The Company anticipates a lower growth rate over the full year.

Core SG&A investments costs were up 10% to $2,368m, reflecting a relatively low base in the first quarter of 2014. The increase reflected the investment in Sales, Marketing and Medical activities that grew year-on-year as the Company approached the anniversary of the acquisition of BMS's share of the global diabetes alliance. Additional investments were made in the quarter to support recent brand launches, including Farxiga/Forxiga and Lynparza, as well as for pre and post-launch activities for Movantik/Moventig. Investment was also maintained in the pre-launch activities for the late-stage pipeline, including the oncology portfolio.

For the full year, the Company is committed to reducing Core SG&A investment costs versus the prior year and a number of programmes designed to meet this target have commenced and will accelerate over the year. These initiatives include a focus on sales and marketing effectiveness, including the leveraging of marketing programmes on a global basis. Other programmes are focused on delivering savings across procurement and support functions, including IT and further footprint optimisation.

Other Operating Income

Core Other Operating Income reached $426m in the quarter primarily reflecting gains on disposals including Myalept ($193m) and other disposals amounting to $109m, including the US rights to Tenormin.

Profit

Core Operating Profit was down 4% to $1,805m. Core Operating Margin was down 1.4 percentage points to 29.8% of Total Revenue as the Company continued to invest in the pipeline and the growth platforms. Core Earnings Per Share were down 3% to $1.08, a marginally favourable performance versus Core Operating Profit. Reported Operating Profit of $933m was 15% higher than the first quarter of 2014. Reported EPS was up by 10% at $0.44.

Productivity

Restructuring charges of $213m were taken in the quarter. The Company continues to make good progress in implementing the fourth phase of restructuring announced in the first quarter of 2013 and the expansion of this programme announced in the first half of 2014. In addition to costs of this programme, the restructuring charge for the quarter included $53m incurred as a consequence of the decision to exit the Westborough site in the US and costs of other initiatives identified since the announcement of the fourth wave of restructuring. The Company also began construction of its new Global R&D Centre and Corporate Headquarters on the Cambridge Biomedical Campus in the quarter.

Finance Income and Expense

Core net finance expense was $118m versus $126m in the first quarter of 2014. Reported net finance expense of $250m included a charge of $132m relating to the discount unwind on contingent consideration creditors recognised on business combinations, principally relating to the acquisition of BMS's share of the global diabetes alliance last year.

Taxation

Both the Reported and Core tax rates for the quarter ended 31 March 2015 were around 19%. The cash tax paid for the quarter was $245m which is 36% of Reported Profit Before Tax and 15% of Core Profit Before Tax. The Reported and Core tax rates for the quarter ended 31 March 2014 were 21% and 19% respectively.

Cash Flow

The Company generated a cash outflow from operating activities of $72m in the quarter, compared with an inflow of $1,187m in the first quarter of 2014. Net cash outflows from investing activities were $556m compared with $3,777m in the first quarter of 2014, mainly reflecting higher upfront payments on business acquisitions in the first quarter of 2014. Net cash distributions to shareholders were $2,342m through dividends of $2,357m, offset by proceeds from the issue of shares of $15m due to the exercise of stock options.

Debt and Capital Structure

At 31 March 2015, outstanding gross debt (interest-bearing loans and borrowings) was $10,569m (31 March 2014: $10,340m). Of the gross debt outstanding at 31 March 2015, $2,299m was due within one year (31 March 2014: $2,787m).

The Company's net debt position at 31 March 2015 was $6,373m (31 March 2014: $4,833m).

Shares in Issue

During the quarter, 0.4 million shares were issued in respect of share option exercises for a consideration of $15m. The total number of shares in issue at 31 March 2015 was 1,264 million.

Guidance

The Company reiterates the guidance provided on 6 March 2015:

- FY 2015 Total Revenue is expected to decline by mid single-digit percent at CER

- Core EPS is expected to increase by low single-digit percent at CER

The Company also provides the following non-guidance information related to currency sensitivity:

- Based on current exchange rates1, Total Revenue is expected to decline by low double-digit percent

- Core EPS is expected to be broadly in line with FY 2014. For additional currency sensitivity information, please see below:

1Based on average daily spot rates YTD to the end of March 2015

2Based on 2014 actual average exchange rates and group currency exposures

3Other important currencies include AUD, BRL, CAD, KRW and RUB

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

 Condensed Consolidated Statement of Cash Flows

Condensed Consolidated Statement of Changes in Equity

* Other reserves includes the capital redemption reserve and the merger reserve.

Notes to the Interim Financial Statements

These unaudited condensed consolidated interim financial statements ("interim financial statements") for the quarter ended 31 March 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union (EU) and as issued by the International Accounting Standards Board (IASB).

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and as issued by the IASB. Except as detailed below, the interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2014.

As announced on 6 March 2015, the Group updated its revenue accounting policy with effect from 1 January 2015. The Group's business model now includes an increasing level of externalisation activity to create value from the strong science that exists in the pipeline. Historically, reported revenue reflected only product sales, with externalisation revenue forming part of other operating income presented below gross profit. From 1 January 2015 externalisation revenue, alongside product sales, are included in total revenue. Externalisation revenue includes development, commercialisation, partnership and out-licence revenue, such as royalties and milestone receipts, together with income from services or repeatable licences. Income is recorded as externalisation revenue when the Group has a significant ongoing interest in the product and/or it is repeatable business and there is no derecognition of an intangible asset. Disposals of assets and businesses, where the Group does not retain an interest, will continue to be recorded in other operating income. The updated financial presentation reflects the Group's entrepreneurial approach and provides a clearer picture of this additional revenue stream. The updated revenue accounting policy results in a presentational change to the Statement of Comprehensive Income only, and has no impact on the Group's net results or net assets. The prior period Condensed Consolidated Statement of Comprehensive Income has been restated accordingly, resulting in $44m of income being reclassified from other operating income to externalisation revenue for the quarter ended 31 March 2014.

The Group has adopted the amendments to IAS 19 Employee Contributions, issued by IASB in November 2013 and effective for periods beginning on or after 1 July 2014. The adoption has not had a significant impact on the Group's profit for the period, net assets or cash flows. There have been no other significant new or revised accounting standards applied in the quarter ended 31 March 2015.

The information contained in Note 5 updates the disclosures concerning legal proceedings and contingent liabilities in the Group's Annual Report and Form 20-F Information 2014.

The Group has considerable financial resources available. As at 31 March 2015 the Group has $3.9bn in financial resources (cash balances of $3.2bn and undrawn committed bank facilities of $3.0bn which are available until April 2020, with only $2.3bn of debt due within one year). The Group's revenues are largely derived from sales of products which are covered by patents which provide a relatively high level of resilience and predictability to cash inflows, although our revenue is expected to continue to be significantly impacted by the expiry of patents over the medium term. In addition, government price interventions in response to budgetary constraints are expected to continue to adversely affect revenues in many of our mature markets. However, we anticipate new revenue streams from both recently launched medicines and products in development, and the Group has a wide diversity of customers and suppliers across different geographic areas. Consequently, the Directors believe that, overall, the Group is well placed to manage its business risks successfully.

On the basis of the above paragraph and after making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the interim financial statements have been prepared on a going concern basis.

The comparative figures for the financial year ended 31 December 2014 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Group's auditors and will be delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Profit before tax for the quarter ended 31 March 2015 is stated after charging restructuring costs of $213m ($479m for the first quarter 2014). These have been charged to profit as follows: