Astrazeneca Regulatory News (AZN)

AstraZeneca PLC

12 November 2021 07:00 GMT

Year to date and Q3 2021 results

AstraZeneca reinforces its scientific leadership through exceptionalpipeline delivery and the addition of Alexion in the quarter

- Total Revenue in the year to date, including Alexion from 21 July 2021, was $25,406m, representing growth of 32% (28% at CER). Total Revenue in the third quarter increased by 50% (48% at CER) to $9,866m

- Excluding the pandemic COVID-19 vaccine, Total Revenue increased 21% (17% at CER) in the year to date to $23,187m, and by 34% (32% at CER) in the quarter to $8,816m

- Eight positive Phase III results since June, with potential to change standard of care in several diseases

- Alexion integration progressing well, creating new opportunities in rare diseases

- Operating Expenses in the quarter reflected the addition of Alexion, as well increased R&D expenses across multiple programs, investment in our COVID-19 medicines, and increased SG&A from pre-launch activities following successful pipeline delivery

- Earnings guidance for the full year is unchanged

In the year to date, AstraZeneca delivered double-digit revenue growth from its Oncology, CVRM1 and R&I2 medicines, and established its Rare Disease capability with the acquisition of Alexion Pharmaceuticals Inc. (Alexion). Rare disease is a high-growth area with rapid innovation and significant unmet medical need.

Since June, AstraZeneca has made significant progress with its late-stage pipeline, reporting eight positive Phase III trial results and the approval of Saphnelo (anifrolumab) in the US for the treatment of systemic lupus erythematosus, and Ultomiris in the EU for children and adolescents with paroxysmal nocturnal haemoglobinuria. Enhertu received a Breakthrough Therapy Designation from the US FDA3 following ground‑breaking results from the DESTINY-Breast03 trial. The Company also announced positive results for Lynparza in prostate cancer, Imfinzi plus tremelimumab in liver cancer, Imfinzi in biliary tract cancer, PT027 in asthma, ALXN1840 in Wilson disease, and AZD7442 in COVID-19 prophylaxis and treatment.

Pascal Soriot, Chief Executive Officer, commented:

"AstraZeneca's scientific leadership continues to provide strong revenue growth and exceptional pipeline delivery, with eight positive late-stage readouts across seven medicines since June, including our long acting antibody combination showing promise in both prevention and treatment of COVID-19. The addition of Alexion furthers our commitment to bring transformative therapies to patients around the world, and I am proud of our colleagues' ongoing dedication and focus.

Our broad portfolio of medicines and diversified geographic exposure provides a robust platform for long-term sustainable growth. Following accelerated investment in upcoming launches after positive data flow, we expect a solid finish to the year and our earnings guidance is unchanged."

Table 1: Revenue and EPS summary

Key elements of Total Revenue performance in the year-to-date included:

- An increase in Product Sales of 33% (29% at CER) to $25,043m

- The first contribution from Rare Disease, which generated $1,311m of revenue in the period following completion of the Alexion acquisition on 21 July 2021

- Oncology growth of 19% (16% at CER) to $9,744m, CVRM growth of 14% (10% at CER) to $6,028m and R&I growth of 16% (12% at CER) to $4,456m

- An increase in Emerging Markets revenue of 33% (28% at CER) to $8,618m. In China, revenue increased 17% (8% CER) to $4,699m in the year to date and by 10% (2% CER) in the quarter. China revenues in the year to date were impacted by pricing pressure associated with NRDL11 and VBP12 programmes.

- Tagrisso's sequential quarterly performance in China was impacted by inventory phasing and stock compensation relating to NRDL changes in March. In future periods, volume growth from increased patient access is expected to compensate for the lower NRDL price

- Revenue in ex-China Emerging Markets increased 60% in the year to date to $3,919m. Excluding vaccine revenue of $1,139m, revenue in ex-China Emerging Markets increased by 13% in the year to date (14% at CER) to $2,780m and by 30% in the quarter to $1,018m, driven by Oncology medicines and Farxiga

- In the US, Total Revenue increased by 29% to $8,305m and in Europe by 40% (31% at CER) to $5,178m, including pandemic COVID-19 vaccine revenue of $736m

Guidance

The Company provides further details on its FY 2021 guidance at CER.

Prior guidance excluded the revenue and profit impact of sales of the pandemic vaccine. The Company is now expecting to progressively transition the vaccine to modest profitability as new orders are received. COVID‑19 vaccine sales in Q4 2021 are expected to be a blend of the original pandemic agreements and new orders, with the large majority coming from pandemic agreements. The limited profit contribution from the vaccine in Q4 2021 is expected to offset costs relating to the Company's long acting antibody combination (AZD7442), resulting in no change to Core EPS guidance. Core Tax Rate guidance is unchanged at 18‑22%.

In general, AstraZeneca continues to recognise the heightened risks and uncertainties from the effects of COVID-19. 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

If foreign-exchange rates for October to December 2021 were to remain at the average of rates seen in the year to date, it is anticipated that there would be a low single-digit favourable impact on Total Revenue and an immaterial impact on Core EPS versus CER data. The Company's foreign-exchange rate sensitivity analysis is contained within the operating and financial review.

Financial summary

- Variances across periods are based on a comparison of the Group's performance in the year to date and the quarter, including Alexion from 21 July 2021, with the Group's performance in the comparative prior periods, which do not include Alexion. Pro forma total revenue growth rates have been presented only for Q3 2021 Rare Disease and its constituent medicines, and do not impact any Group totals

- Total Revenue, comprising Product Sales and Collaboration Revenue, increased by 32% in the year to date (28% at CER) to $25,406m. Total Revenue included $2,219m from the pandemic COVID-19 vaccine

- Reported Gross Profit14 Margin in the year to date declined eleven percentage points to 68.8%; Core Gross Profit Margin declined six percentage points in the year to date to 74.1%, predominantly reflecting the equitable supply, at no profit to AstraZeneca, of the pandemic COVID-19 vaccine, together with an increasing impact from profit-sharing arrangements (primarily Lynparza and roxadustat) and the impact of the NRDL and VBP programmes in China. These effects were partially offset by the contribution of Alexion from 21 July 2021, a higher proportion of Oncology sales, and increasing patient access in China. Reported Gross Profit Margin was also impacted by $1,044m due to the unwind of the fair value adjustment to Alexion inventories at the date of acquisition. Variations in gross margin performance between periods can be expected to continue

- Reported Total Operating Expense increased in the year to date by 39% (34% at CER) to $17,591m. Core Total Operating Expense increased by 24% (20% at CER) to $13,649m and represented 54% of Total Revenue (YTD 2020: 57%)

- Reported R&D Expense increased in the year to date by 67% (63% at CER) to $7,152m including an impairment charge of $1,172m recognised in the quarter on an intangible asset related to the acquisition of Ardea Biosciences, Inc. in 2012, following the decision to discontinue the development of verinurad. Core R&D Expense increased in the year to date by 34% (30% at CER) to $5,591m with increases in both Reported and Core R&D Expense reflecting the Company's continued investment in its COVID-19 vaccine and AZD7442, investment in several late-stage Oncology trials and the advancement of a number of Phase II clinical development programmes in BioPharmaceuticals

- Reported SG&A Expense increased in the year to date by 25% (21% at CER) to $10,117m and includes the increased amortisation of intangible assets related to the Alexion acquisition. Core SG&A Expense increased by 19% (14% at CER) to $7,736m, reflecting the addition of Alexion SG&A expenses from 21 July 2021, investment in Oncology-medicine launches, the launch of several new BioPharmaceuticals medicines, particularly in the US, AstraZeneca's further expansion in Emerging Markets, and the existing infrastructure base in China

- Reported and Core Other Operating Income and Expense15 increased in the year to date by 51% (50% at CER) to $1,345m and $1,346m respectively, and included $776m income from the divestment of AstraZeneca's 26.7% share of Viela Bio, Inc. (Viela) in March 2021

- The Reported Operating Profit Margin declined fourteen percentage points (thirteen at CER) to 5.3%, reflecting the aforementioned intangible impairments and other factors. The Core Operating Profit Margin declined two percentage points (one percentage point at CER) in the year to date to 26.0% driven by the aforementioned increase in R&D and SG&A expenses

- Reported EPS in the year to date declined 80% (65% at CER) to $0.33. Core EPS increased by 22% (23% at CER) to $3.59. Reported and Core EPS were adversely affected by $0.03 due to the pandemic COVID‑19 vaccine

Table 2: Select Medicines Total Revenue performance

Further details of the individual medicine performances are provided in the Total Revenue section.

Table 3: Regional Total Revenue performance

Further details of the regional performances are provided in the Regional Total Revenue section.

Total Revenue from Emerging Markets increased 33% (28% CER) to $8,618m, of which $1,139m came from the pandemic COVID-19 vaccine. Excluding the COVID-19 vaccine, Total Revenue from Emerging Markets increased by 16% (10% at CER) in the year to date to $7,479m.

Corporate and business development

In 2019, Caelum Biosciences (Caelum) and Alexion entered into a collaboration to develop CAEL-101 for light chain amyloidosis, whereby Alexion acquired a minority equity interest and an exclusive option to acquire the remaining equity in Caelum. AstraZeneca has treated Caelum as a subsidiary from the date of acquisition of Alexion, reflecting a non-controlling interest of $150m. On 5 October 2021, the Group completed the acquisition of the remaining shares of Caelum and paid its shareholders the option exercise price of $150m, with the potential for additional payments of up to $350m upon achievement of regulatory and commercial milestones.

In November 2021, AstraZeneca agreed to transfer its global rights to Eklira, known as Tudorza in the US, and Duaklir to Covis Pharma Group for $270m payable on completion, which is expected in the fourth quarter of 2021. Covis Pharma Group will also cover certain ongoing development costs related to the medicines. The income arising from the upfront payment will be fully offset by a charge for derecognition of the associated intangible asset and therefore no Other Operating Income will be recognised in AstraZeneca's financial statements. 

Sustainability summary

a) Access to healthcare

In the third quarter of 2021, the Company delivered approximately 67 million doses of its pandemic COVID-19 vaccine through COVAX17. As of 30 September 2021, the Company and its sublicensee Serum Institute of India Pvt. Ltd. (SII) have delivered more than 145 million doses with COVAX to over 125 countries, approximately half of all COVAX supply. The majority of the doses have gone to low and middle-income countries. Globally, AstraZeneca and its sub-licensing partners have released more than 1.5 billion vaccine doses as of the 30 September 2021, for supply in over 170 countries.

b) Environmental protection

On 3 November 2021, at the 26th UN Climate Change Conference (COP26), HRH The Prince of Wales named AstraZeneca as one of the first holders of the Terra Carta Seal, in recognition of the company's efforts to lead and accelerate action for a more sustainable future. In addition, Pascal Soriot was recognised as the Champion of the new Sustainable Markets Initiative (SMI) Health System Taskforce, which was launched at COP26 with HRH The Prince of Wales and with health systems leaders, with the shared ambition to accelerate the delivery of net zero, sustainable healthcare.

A more extensive sustainability update is provided later in this announcement.

Notes

The following notes refer to pages one to five.

1. Cardiovascular, Renal & Metabolism

2. Respiratory & Immunology

3. US Food and Drug Administration

4. Constant exchange rates. These are financial measures that are not accounted for according to generally accepted accounting principles (GAAP) because they remove the effects of currency movements from Reported results.

5. The pandemic COVID-19 vaccine Total Revenue includes $83m of Collaboration Revenue of which $80m is receivable from the Serum Institute of India Pvt. Ltd. (SII) with an equivalent charge included within Other Operating Income and Expense in relation to consequent obligations under the license agreement with Oxford University Innovation (OUI).

6. Not meaningful.

7. Total Revenue ex-pandemic vaccine is a non-GAAP measure, which excludes the revenue impact from sales of the pandemic COVID‑19 vaccine during the pandemic period to help facilitate a comparison to guidance.

8. Reported financial measures are the financial results presented in accordance with UK-adopted International Accounting Standards and EU-adopted International Financial Reporting Standards (IFRSs), and IFRS as issued by the International Accounting Standards Board (IASB).

9. Earnings per share.

10. Core financial measures. These are non-GAAP financial measures because, unlike Reported performance, they cannot be derived directly from the information in the Group's Financial Statements. See the Operating and financial review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

11. China's National Reimbursement Drug List.

12. Volume-based procurement.

13. The calculation of Core EPS for guidance is based on 1,418 million weighted average number of shares outstanding during 2021. The number of shares in issue as of the close of the Alexion acquisition was 1,549 million.

14. Gross Profit is defined as Total Revenue minus Cost of Sales. The calculation of Reported and Core Gross Profit Margin excludes the impact of Collaboration Revenue and any associated costs, thereby reflecting the underlying performance of Product Sales.

15. Where AstraZeneca does not retain a significant ongoing interest in medicines or potential new medicines, income from divestments is reported within Reported and Core Other Operating Income and Expense in the Company's financial statements.

16. Growth rates on Rare Disease medicines have been calculated on a pro forma basis by comparing post-acquisition revenues from 21 July 2021 with the corresponding prior year pre-acquisition Q3 revenues previously published by Alexion adjusted pro rata to match the post-acquisition period. Pro forma Total Revenue growth rates have been presented only for Q3 2021 Rare Disease area and constituent medicines, and do not impact any Group totals.

17. COVID-19 Vaccines Global Access (COVAX) is a coalition co-led by CEPI, the Coalition for Epidemic Preparedness Innovations, Gavi, the Vaccine Alliance (Gavi), and the WHO. It is the only global initiative bringing governments and manufacturers together to ensure that safe and effective COVID-19 vaccines are available worldwide to both higher-income and lower-income countries. 

Upcoming pipeline news

The following table highlights developments in the late-stage pipeline since the prior results announcement.

Table 4: Pipeline highlights

Table 5: Pipeline anticipated major news flow

Conference call

A conference call and webcast for investors and analysts will begin at 11:45 GMT. Details can be accessed via astrazeneca.com.

Reporting calendar

The Company intends to publish its full-year and fourth-quarter results on Thursday 10 February 2022.

AstraZeneca

AstraZeneca (LSE/STO/Nasdaq: AZN) is a global, science-led biopharmaceutical company that focuses on the discovery, development, and commercialisation of prescription medicines in Oncology, Rare Disease, and BioPharmaceuticals, including Cardiovascular, Renal & Metabolism, and Respiratory & Immunology. Based in Cambridge, UK, AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. Please visit astrazeneca.com and follow the Company on Twitter @AstraZeneca.

Contacts

For details on how to contact the Investor Relations Team, please click here. For Media contacts, click here.

All narrative on growth and results in this section is based on actual exchange rates, and financial figures are in US$ millions ($m), unless stated otherwise. The performance shown in this announcement covers the nine-month period to 30 September 2021 ('the year to date' or 'YTD 2021') and the three-month period to 30 September 2021 ('the quarter', 'the third quarter' or 'Q3 2021') compared to the nine-month period to 30 September 2020 (YTD 2020) and the three-month period to 30 September 2020 (Q3 2020) respectively, unless stated otherwise.

Following the acquisition of Alexion, the Group has made a number of changes to presented performance:

- A new disease area, Rare Disease, presents the performance of medicines acquired with Alexion

- The Group has ceased reporting New Medicines as a performance metric (Tagrisso, Imfinzi, Lynparza, Calquence, Enhertu, Koselugo, Farxiga, Brilinta, Lokelma, roxadustat, Fasenra, Bevespi and Breztri). In line with practice these medicines will be reported within their respective disease areas

- The Group has ceased reporting New CVRM as a performance metric (Brilinta, Renal and Diabetes medicines). In line with practice these medicines will be reported within the CVRM disease area

Comparative performance relating to previous reporting periods will be presented in line with the new presentation. This approach is representative of the strategic priorities of the enlarged Group.

Core financial measures, EBITDA, Net Debt, Initial Collaboration Revenue and Ongoing Collaboration Revenue are non-GAAP financial measures because they cannot be derived directly from the Group's Interim Financial Statements. Management believes that these non-GAAP financial measures, when provided in combination with Reported results, provide investors and analysts with helpful supplementary information to understand better the financial performance and position of the Group on a comparable basis from period to period. These non-GAAP financial measures are not a substitute for, or superior to, financial measures prepared in accordance with GAAP.

Core financial measures are adjusted to exclude certain significant items, such as:

- Amortisation and impairment of intangible assets, including impairment reversals but excluding any charges relating to IT assets

- Charges and provisions related to restructuring programmes, which includes charges that relate to the impact of restructuring programmes on capitalised IT assets

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

Details on the nature of Core financial measures are provided on page 84 of the Annual Report and Form 20-F Information 2020. Following the Alexion acquisition and in line with its policies, the Group will exclude the following acquisition-related items in the current and future periods from its Core results:

- The Group recognised significant additional intangible assets reflecting the fair value of acquired launched medicines and medicines in development. Future amortisation charges on these assets will be excluded from the Group's Core results, similar to the treatment of other intangible assets

- The fair value of inventory acquired on completion was significantly higher than historical cost. The adjustment to increase the inventory to fair value is held in inventory until the product is sold, at which time it is released to the Income Statement in Cost of Sales. This results in a lower gross margin in the first turn of inventory and this temporary effect, which is expected over approximately 18 months post acquisition in line with revenues, will be excluded from the Group's Core results

- The fair value of replacement employee share awards is higher than both the value of the Alexion awards the employees were originally granted and the expected value of future awards to those employees. As a result, the Group will recognise an inflated expense during the remaining vesting period of these awards. This temporary increase in operating expenses, when compared with the expected expense based on the grant-date value, will be excluded from the Group's Core results

- Other acquisition-related items to be excluded from the Group's Core results include professional fees, retention bonuses included in the acquisition agreement and the effect of unwinding other acquisition-related fair value adjustments over time

Further details of these costs are included in Note 5, Acquisition of Alexion. All the amounts above are presented in the 'Acquisition of Alexion' column on the Reconciliation of Core to Reported Financial Measures, except for intangible asset amortisation, which is presented in the 'Intangible Asset Amortisation & Impairments' column.

Reference should be made to the Reconciliation of Reported to Core financial measures table included in the financial performance section in this announcement.

Total Revenue ex-pandemic vaccine is a non-GAAP financial measure introduced in the first quarter of 2021 to enable management to explain the financial impact of the pandemic COVID-19 vaccine on the Group's Total Revenue.

EBITDA is defined as Reported Profit Before Tax after adding back Net Finance Expense, results from Joint Ventures and Associates and charges for Depreciation, Amortisation and Impairment. Reference should be made to the Reconciliation of Reported Profit Before Tax to EBITDA included in the financial performance section in this announcement.

Net Debt is defined as Interest-bearing loans and borrowings and Lease liabilities, net of Cash and cash equivalents, Other investments, and net derivative financial instruments. Reference should be made to Note 3 'Net Debt' included in the Notes to the Interim Financial Statements in this announcement.

Ongoing Collaboration Revenue is defined as Collaboration Revenue excluding Initial Collaboration Revenue (which is defined as Collaboration Revenue that is recognised at the date of completion of an agreement or transaction, in respect of upfront consideration). Ongoing Collaboration Revenue comprises, among other items, royalties, milestone revenue and profit-sharing income. Reference should be made to the Collaboration Revenue table in this operating and financial review.

The Company strongly encourages investors and analysts not to rely on any single financial measure, but to review AstraZeneca's financial statements, including the Notes thereto, and other available Company reports, carefully and in their entirety.

Due to rounding, the sum of a number of dollar values and percentages may not agree to totals.

The performance of the Company's medicines is shown below, with more details available from Note 8.

Table 6: Total Revenue by disease area

Table 7: Disease area and medicine performance

Table 8: Collaboration Revenue

Other Collaboration Revenue included contributions from Movantik, Zoladex, Eklira, Duaklir, Forxiga, Nexium OTC[39] and other royalties. In addition, Other Collaboration Revenue also included $80m receivable from SII for the pandemic COVID-19 vaccine; an equivalent charge has been included within Other Operating Income and Expense in relation to consequent obligations under the license agreement with Oxford University Innovation (OUI). Initial Collaboration Revenue of $75m was recorded in the year to date following the agreement to out-license the authorised generic rights to Nexium in Japan.

Oncology

Total Revenue of $9,744m in the year to date; an increase of 19% (16% at CER). Oncology represented 38% of overall Total Revenue (YTD 2020: 43%).

Tagrisso

Tagrisso has received regulatory approval in 64 countries, including the US, China, and in the EU, for use as an adjuvant treatment of EGFRm NSCLC patients, with 13 reimbursements granted so far. This expands upon the patient benefit from use in the 1st-line treatment of patients with EGFRm NSCLC with regulatory approval in 91 countries, including the US, China, in the EU and Japan. To date, 47 reimbursements have been granted in this setting, with further decisions anticipated. These developments followed Tagrisso's regulatory approval in 91 countries, including the US, China, in the EU and Japan, to treat patients with EGFR T790M[40] NSCLC, an indication in which 67 reimbursements have been granted.

Total Revenue, entirely comprising Product Sales, amounted to $3,701m in the year to date and represented growth of 17% (13% at CER). Sales in Q3 increased 8% (7% at CER) to $1,247m.

Sales in the US increased by 13% in the year to date to $1,294m and increased 5% to $441m in Q3. Performance in Q3 was impacted by the cumulative effect of lower levels of lung cancer diagnosis and biomarker testing during the COVID-19 pandemic. This was partially offset by increased use of Tagrisso for the adjuvant treatment of Stage IB to IIIA EGFRm NSCLC patients following the US Food and Drug Administration (FDA) approval in 2020. Current levels of diagnosis, biomarker testing and treatment of NSCLC continue to improve, but remain below pre-COVID levels.

Tagrisso sales in Emerging Markets increased by 6% in the year to date (1% at CER) to $1,012m; the performance was impacted by the admission of the medicine to the China NRDL in March 2021 for the 1st-line setting and the renewal in the 2nd-line setting. During the year to date, additional demand from increased patient access in China has not yet completely offset the NRDL price reduction which came into effect in March 2021. Emerging Markets sales of $315m in Q3 represented a decline of 11% (15% at CER) driven by lower sales in China, partially offset by growth in ex-China Emerging Markets. In Q3 2021, sales in China were lower than the prior quarter, with the phasing of inventory movements around the aforementioned NRDL changes more than offsetting the continued benefit of volume increases from expansion into 1st-line treatment. Sales in Japan increased by 9% (8% at CER) to $568m in the year to date. In Europe, sales of $727m in the year to date represented an increase of 45% (35% at CER), driven by greater adoption in the 1st-line setting, as more reimbursements were granted.

Imfinzi

Imfinzi has received regulatory approval in 74 countries, including the US, China, in the EU, and Japan, with 35 reimbursements granted, to treat patients with unresectable Stage III NSCLC, whose disease has not progressed following platinum-based CRT[41]. Imfinzi has also been approved to treat ES-SCLC[42] patients in 63 countries, with nine reimbursements granted.

Total Revenue, entirely comprising Product Sales, amounted to $1,778m in the year to date and represented growth of 20% (17% at CER); the performance reflected the increased use of Imfinzi to treat patients with ES‑SCLC. US sales increased by 3% to $916m, despite the continued COVID-19 related decrease in lung cancer diagnoses. In Japan, growth of 34% (33% at CER) represented sales of $257m. Europe sales increased by 37% (27% at CER) to $347m, reflecting a growing number of reimbursements in the region. Sales in Emerging Markets increased to $211m, representing a growth of 87% (77% at CER) following recent regulatory approvals and launches, including in China.

Lynparza

Lynparza has received regulatory approval in 86 countries for the treatment of ovarian cancer; it has also been approved in 84 countries for the treatment of metastatic breast cancer, and in 68 countries for the treatment of pancreatic cancer. Lynparza has received regulatory approval in 70 countries for the 2nd-line treatment of certain prostate-cancer patients.

Total Revenue, entirely comprising Product Sales in the year to date, amounted to $1,719m, reflecting growth of 21% (18% at CER) benefiting from further launches across multiple cancer types globally. US Product Sales increased by 26% to $793m, predominantly due to growth in 2nd-line HRRm mCRPC and 1st-line HRD+[43] ovarian cancer. Lynparza is the leading medicine in the PARP[44] inhibitor class globally across four tumour types, as measured by total prescription volumes. Product Sales in Europe increased by 47% (36% at CER) to $456m, reflecting additional reimbursements and increasing BRCAm-testing rates, as well as successful 1st-line BRCAm ovarian and 2nd-line HRRm[45] prostate cancer launches.

Sales in Japan amounted to $145m, representing growth of 22%. Emerging Markets Product Sales were $282m, up by 44% (40% at CER); in Q3 sales increased 28% (23% at CER) to $96m. In China, Lynparza was admitted to the NRDL as a 1st-line treatment for BRCAm[46] ovarian cancer patients with effect from March 2021.

Enhertu

Total Revenue, predominately comprising Collaboration Revenue, increased by 134% in the year to date to $147m. Global in-market sales, excluding Japan, amounted to $293m in the year to date. In Japan, AstraZeneca receives a mid-single-digit percentage royalty on sales made by Daiichi Sankyo Company Limited (Daiichi Sankyo). US in-market sales, recorded by Daiichi Sankyo, amounted to $253m in the year to date and $92m in the quarter.

Calquence

Calquence has received regulatory approvals for the treatment patients with CLL in 70 countries and in 34 countries for the treatment of patients with R/R mantle cell lymphoma with reimbursement obtained in 20 and 13 countries, respectively.

Total Revenue, entirely comprising Product Sales, amounted to $843m in the year to date and represented growth of 148% (146% at CER). US sales increased by 124% in the year to date to $752m, representing the majority of sales, with the performance benefitting from increased market share. In Europe, Product Sales of $69m (YTD 2020: $nil) reflected the ongoing launch of the medicine.

Koselugo

Total Revenue, predominately comprising Product Sales in the US, amounted to $74m (YTD 2020: $20m) in the year to date, following its launch in the second quarter of 2020 to treat the rare disease NF1[47] in paediatric patients aged two years and older who have symptomatic, inoperable plexiform neurofibromas.

Orpathys

In June 2021, AstraZeneca and HUTCHMED's Orpathys was granted conditional approval in China to treat patients with NSCLC with MET exon 14 skipping[48] alterations that have progressed following prior systemic therapy or are unable to receive chemotherapy. Total Revenue entirely comprising Product Sales was $10m (YTD 2020: $nil).

Zoladex

Total Revenue, predominantly comprising Product Sales, amounted to $729m in the year to date and represented an increase of 2% (a decline of 3% at CER).

Emerging Markets sales of Zoladex increased by 9% (3% at CER) to $465m. Sales in Europe increased by 7% (declined by 1% at CER) to $112m while, in the Established RoW region, sales declined by 5% (8% at CER) to $128m.

Faslodex

Total Revenue, entirely comprising Product Sales, amounted to $329m in the year to date and represented a decline of 27% (29% at CER) due to increasing competition from several generic versions of the medicine.

Emerging Markets sales decreased by 14% (17% at CER) to $122m, while US sales declined by 47% to $24m; in Europe, sales fell by 45% (49% at CER) to $93m. In Japan, sales increased 2% (1% at CER) to $87m.

Iressa

Total Revenue, entirely comprising Product Sales, amounted to $149m in the year to date and represented a decline of 26% (31% at CER). Emerging Markets sales fell by 25% (30% at CER) to $122m.

BioPharmaceuticals: CVRM

Total Revenue increased by 14% in the year to date (10% at CER) to $6,028m and represented 24% of Total Revenue (YTD 2020: 27%), reflecting the strong performance of Farxiga in the period.

Farxiga

Total Revenue, predominantly comprising Product Sales, amounted to $2,156m in the year to date and represented growth of 57% (51% at CER). The performance of Farxiga benefitted from growth in the SGLT2[49] inhibitor class in many regions, with volume share increasing faster than the overall market in most major regions.

Emerging Markets sales increased by 80% (74% at CER) to $877m in the year to date, still benefitting from the addition of Forxiga to the China NRDL in 2020. The initial price impact has been more than offset by increased access for patients. Forxiga's NRDL status is due for renegotiation in the fourth quarter of 2021.

In the US, sales increased by 31% in the year to date to $504m, reflecting the benefit of the regulatory approval in May 2020 for HFrEF and more recently the approval for the treatment of CKD which was obtained in May 2021. Both approvals include patients with and without T2D[50].

Sales in Europe increased by 61% (50% at CER) to $584m in the year to date. The performance reflected SGLT2 inhibitor class growth, the beneficial addition of CV outcomes trial data to the label, the HFrEF regulatory approval in November 2020, and CKD approval in August 2021. In Japan, sales to collaborator Ono Pharmaceutical Co., Ltd, which records in-market sales, increased by 40% (39% at CER) to $108m.

Brilinta

Total Revenue, entirely comprising Product Sales, amounted to $1,124m in the year to date, representing a decrease of 9% (11% at CER). Emerging Markets sales declined by 35% (37% at CER) to $256m, reflecting the implementation of China's VBP programme, resulting in significantly lower market access for the medicine, and a mandatory price cut. In the US, sales increased by 4% to $558m partly reflecting the recent launch of Brilinta as a treatment to reduce the risk of stroke in patients following an acute ischaemic stroke or high-risk transient ischaemic attack. Sales of Brilique in Europe increased by 2% (declined by 5% at CER) to $263m. The overall performance in the year to date continued to be adversely impacted by fewer elective procedures due to the effects of COVID-19.

Onglyza

Total Revenue, entirely comprising Product Sales, amounted to $284m in the year to date and represented a decline of 22% (25% at CER). Sales in Emerging Markets decreased by 2% (6% at CER) to $151m. US sales of Onglyza fell by 53% in the year to $62m as the DPP-4[51] inhibitor class continues to decline, whereas in Europe sales increased by 10% (2% at CER) to $47m.

Bydureon

Total Revenue, entirely comprising Product Sales, amounted to $293m in the year to date, representing a decline of 10% (11% at CER). US sales decreased by 12% in the year to date to $243m following the withdrawal of the dual-chamber pen and lower demand for the Bydureon BCise auto-injector device. Sales in Europe increased by 12% (4% at CER) to $43m; the performance reflected the growth of the overall glucagon-like peptide-1 receptor class.

Lokelma

Total Revenue, entirely comprising Product Sales, amounted to $122m in the year to date, representing an increase of 153% (151% at CER). Sales in the US increased by 119% to $82m, reflecting the growth in the potassium binder class. Lokelma continued to be the branded market share leader.

Sales in Japan increased to $28m in the year to date (YTD 2020: $5m) despite Ryotanki, a regulation that restricts prescriptions to two weeks' supply in the first year of launch. The restriction lifted in June 2021 and no longer applies. During the period, expansion in Europe continued with launches in several new markets; sales amounted to $8m (YTD 2020: $3m).

Roxadustat

Total Revenue in China, predominantly comprising Product Sales, amounted to $148m in the year to date (YTD 2020: $19m). From January 2021, AstraZeneca started recognising the overwhelming majority of China revenue as Product Sales following an amendment in July 2020 to the existing licence agreement with FibroGen, Inc. (FibroGen).

Crestor

Total Revenue, primarily comprising Product Sales, amounted to $838m in the year to date and represented a decline of 5% (9% at CER).

In Emerging Markets, sales increased by 7% (2% at CER) to $597m, despite the adverse impact of China's VBP programme. US sales declined by 17% to $59m, whereas in Europe, revenue decreased by 54% (57% at CER) in the year to date to $45m following the February 2021 divestment of European rights in more than 30 countries to Grünenthal GmbH (Grünenthal). In Japan, where AstraZeneca collaborates with Shionogi Co., Ltd, sales declined by 10% to $109m.

BioPharmaceuticals: Respiratory & Immunology

Total Revenue, which included Ongoing Collaboration Revenue of $12m from Duaklir, Eklira and other medicines, increased by 16% in the year to date (12% at CER) to $4,456m and represented 18% of Total Revenue (YTD 2020: 20%). Due to the adverse effect of COVID-19 on Pulmicort sales in the first nine months of 2020, the year-on-year comparison was favourably impacted.

Symbicort

Total Revenue, entirely comprising Product Sales, was stable at $2,047m in the year to date (a decline of 3% at CER). Symbicort remains the global market-volume and value leader within the ICS[52] / LABA[53] class. Growth in the global ICS/LABA class has been limited, due to the continued impact of COVID-19 on the prevalence and diagnosis rates of respiratory diseases, lower levels of respiratory symptoms, and reduced use of medicines.

In the US, sales increased by 6% in the year to date to $804m. The positive performance benefitted from early signs of a recovery in the ICS/LABA market and a stable market share, offset by managed markets.

Emerging Markets sales increased by 8% (4% at CER) to $457m, following several additional approvals of Symbicort as a medicine to treat patients with asthma on an as-needed basis, and despite COVID-19 related pressures on class growth. In Europe, sales decreased by 4% (11% at CER) in the year to date to $499m. Sales in Japan declined by 34% (35% at CER) to $95m in the year to date due to the ongoing adverse impact of generic competition and a contracting ICS/LABA market. 

Pulmicort

Total Revenue, entirely comprising Product Sales, amounted to $714m in the year to date and represented an increase of 14% (7% at CER).

Emerging Markets, where Pulmicort sales increased by 20% (13% at CER) in the year to date to $578m, represented 81% of the global total. Pulmicort was included in the latest round of VBP announced in June 2021, which will result in significantly lower market access and a mandatory price reduction for the medicine in future periods. Implementation of the programme for Pulmicort, began after the end of Q3 2021, in October 2021.

Sales in the US decreased by 1% in the year to date to $53m due to managed markets. Europe sales decreased by 10% (17% at CER) to $49m. In Japan, sales decreased by 25% in the year to date to $17m following increasing generic competition.

Fasenra

Total Revenue, entirely comprising Product Sales, increased by 35% (32% at CER) in the year to date to $901m.

Sales in the US increased by 31% in the year to date to $555m due to a partial recovery of the severe asthma biologic market. In Europe, sales increased by 51% (40% at CER) in the year to date to $211m; the performance primarily due to growth in new patient starts. Sales in Emerging Markets increased 55% (52% at CER) to $15m.

Daliresp

Total Revenue, entirely comprising Product Sales, amounted to $168m in the year to date and represented an increase of 3%. US sales increased by 9% to $153m.

Breztri

Breztri has received regulatory approval in 36 countries, including the US, in the EU, China, and Japan, to treat patients with COPD; further regulatory reviews are ongoing. Breztri has achieved reimbursement in 14 countries.

Total Revenue, entirely comprising Product Sales, amounted to $130m in the year to date (YTD 2020: $21m). Sales in the US amounted to $68m (YTD 2020: $3m), following encouraging market share growth in the fixed-dose triple market. Emerging Markets sales amounted to $40m in the year to date (YTD 2020: $14m), with the performance benefitting from inclusion of the medicine into China's NRDL in March 2021, which has significantly increased the number of patients with access to Breztri in China. Sales in Japan amounted to $17m (YTD 2020: $4m). In Europe, under the name Trixeo, sales amounted to $4m in the year to date (YTD 2020: $nil).

Saphnelo (anifrolumab)

Saphnelo has received regulatory approval in the US and Japan to treat SLE; further regulatory reviews are ongoing.

Total Revenue, entirely comprising Product Sales in the US, amounted to $1m in the year to date.

Rare Disease

Total Revenue recorded post-acquisition from 21 July 2021, entirely comprising Product Sales, amounted to $1,311m representing a pro rata increase of 5% (6% at CER) in Q3 2021. Pro forma pro rata growth rates on Rare Disease medicines for Q3 2021 have been calculated by comparing post-acquisition revenues from 21 July 2021 with the corresponding prior year pre-acquisition Q3 revenues previously published by Alexion, adjusted pro rata to match the post-acquisition period.

Soliris

Total Revenue amounted to $798m. This represented a pro rata decline on a pro forma basis of 3% (2% at CER) in Q3 2021.

In the US, Total Revenue amounted to $460m, representing a pro forma pro rata increase of 4% in Q3 2021. Sales benefitted from growing use in neurology indications, including gMG and NMOSD, offset by patient conversion to Ultomiris in PNH and aHUS.

Outside the US, Total Revenue amounted to $338m. Performance during the period was driven by underlying growth in neurology indications, gMG and NMOSD, and impacted by the successful conversion to Ultomiris, which offers patients a lower average annual treatment cost, and a more convenient dosing schedule with every eight week dosing versus Soliris's every two week regimen.

Ultomiris

Total Revenue amounted to $297m, representing a pro rata increase of 31% in Q3 2021. In the US, Total Revenue amounted to $167m, representing a pro rata increase of 25% in Q3 2021. Outside the US, Total Revenue amounted to $130m. Performance was driven by strong conversion from Soliris in PNH and aHUS, as well as new country launches in the quarter. Quarter on quarter variability can be expected due to the every eight week dosing schedule.

Strensiq

Total Revenue amounted to $159m, representing a pro forma pro rata increase of 7% (8% at CER) in Q3 2021.

In the US, Total Revenue amounted $124m, representing pro forma pro rata growth of 6%. This was driven by underlying volume gains, partly offset by a one-time true-up payment.

Other medicines (outside the main disease areas)

Total Revenue, primarily comprising Product Sales, amounted to $1,648m in the year to date, a decrease of 13% (16% at CER). This does not include revenue from the COVID-19 vaccine, which is covered in the COVID‑19 commentary. Other medicines Total Revenue represented 6% of overall Total Revenue (YTD 2020: 10%).

Nexium

Total Revenue, predominantly comprising Product Sales, declined by 4% (7% at CER) in the year to date to $1,091m. Revenue in Emerging Markets increased by 3% (declined 1% at CER) in the year to date to $576m, reflecting the impact of the inclusion of Nexium (oral) in China's VBP programme in February 2021 resulting in significantly lower market access and a mandatory price reduction. Nexium (i.v.) was included in the fifth round of VBP with implementation occurring after the end of Q3 2021, in October.

In Japan, where AstraZeneca collaborates with Daiichi Sankyo, Total Revenue declined by 5% (6% at CER) in the year to date to $306m. In Q3 2021, Total Revenue in Japan declined 63% (62% at CER) to $44m reflecting phasing of orders from Daiichi Sankyo ahead of the previously announced conclusion of the joint sales promotion by the two companies. From 15 September 2021, AstraZeneca was solely responsible for marketing, distributing, and promoting Nexium in Japan. Total Revenue in the US declined by 19% to $115m, and in Europe, it decreased by 24% (30% at CER) to $47m.

Synagis

Total Revenue, entirely comprising Product Sales, decreased by 42% (41% at CER) in the year to date to $170m. Sales in the quarter increased by 3% (5% at CER) to $122m.

Sales in Europe declined by 67% in the year to date to $81m. This performance reflected the phasing of orders from AbbVie Inc. (AbbVie) prior to the expiry of the ex-US commercial rights agreement between AstraZeneca and AbbVie on 30 June 2021 and changes as a result of the reversion of ex-US rights to AstraZeneca thereafter. Prior to the expiry of the agreement on 30 June 2021, sales made to AbbVie were reported in Europe. During the quarter, AstraZeneca began recording revenues in regions that had been covered by the aforementioned agreement including in Q3, sales in Emerging Markets of $15m (Q3 2020: $nil), sales in Europe of $38m (Q3 2020: $97m) and sales in Established Rest of World of $53m (Q3 2020: $nil).

FluMist

Total Revenue, entirely comprising of Product Sales, declined 35% (37% at CER) to $75m in the year to date due to a one-off supplemental order in the US in 2020 causing an unfavourable comparison to the prior year. Sales in the US declined by 65% to $23m as a result. Sales in Europe in the year to date increased 5% (1% at CER) to $51m.

COVID-19

Pandemic COVID-19 vaccine

Total Revenue, predominantly comprised of Product Sales, amounted to $2,219m in the year to date reflecting the delivery of c. 580m doses worldwide by AstraZeneca[54]. Sales in Europe were $736m, Emerging Markets sales were $1,139m, and in Established RoW sales amounted to $344m.

A geographical split of Product Sales is shown in Note 8.

Table 9: Regional Total Revenue

Table 10: Emerging Markets Total Revenue disease-area performance

Table 11: Ex-China Emerging Markets Total Revenue

China Total Revenue comprised 55% of Emerging Markets Total Revenue (YTD 2020: 62%) and increased by 17% (8% at CER) in the year to date to $4,699m.

Ex-China Emerging Markets Total Revenue, primarily comprising Product Sales, increased by 60% in the year to date to $3,919m. Excluding the COVID-19 vaccine, Total Revenue increased by 13% (14% at CER) to $2,780m in the year to date and by 30% in the quarter to $1,019m.

Table 12: Reported Profit and Loss - YTD 2021

Table 13: Reported Profit and Loss - Q3 2021

Table 14: Reconciliation of Reported Profit Before Tax to EBITDA - YTD 2021

EBITDA of $5,686m in the year to date (YTD 2020: $6,027m) has been negatively impacted by the $1,044m (YTD 2020: $nil) unwind of inventory fair value uplift recognised on acquisition of Alexion. The unwind of inventory fair value is expected to depress EBITDA over approximately 18 months post-acquisition in line with revenues.

Table 15: Reconciliation of Reported (Loss)/Profit Before Tax to EBITDA - Q3 2021

EBITDA of $1,114m in the quarter to date (Q3 2020: $1,972m) has been negatively impacted by the $1,044m (YTD 2020: $nil) unwind of inventory fair value uplift recognised on acquisition of Alexion. The unwind of inventory fair value is expected to depress EBITDA over approximately 18 months post-acquisition in line with revenues.

Table 16: Reconciliation of Reported to Core financial measures - YTD 2021

Table 17: Reconciliation of Reported to Core financial measures - Q3 2021

a) Gross Profit

Reported Gross Profit Margin in the year to date declined eleven percentage points to 68.8%; Core Gross Profit Margin declined six percentage points in the year to date to 74.1% predominantly reflecting the equitable supply, at no profit to AstraZeneca, of the pandemic COVID-19 vaccine, together with an increasing impact from profit-sharing arrangements (primarily Lynparza and roxadustat) and the impact of the NRDL and VBP programmes in China. These effects were partially offset by the contribution from Alexion from 21 July 2021, a higher proportion of Oncology sales, and increasing patient access in China. Reported Gross Profit Margin has also been impacted by the unwind of the fair value adjustment to Alexion inventories at the date of acquisition. The fair value uplift is expected to unwind through Reported Cost of Sales over the 18 months post-acquisition, and in Q3 2021, the impact of the fair value uplift unwind on Cost of Sales was $1,044m. Variations in gross margin performance between periods can be expected to continue.

b) Total Operating Expense

Reported Total Operating Expense increased in the year to date by 39% (34% at CER) to $17,591m. Core Total Operating Expense increased by 24% (20% at CER) to $13,649m and represented 54% of Total Revenue (YTD 2020: 57%).

Reported R&D Expense increased in the year to date by 67% (63% at CER) to $7,152m including an impairment charge of $1,172m recognised in the quarter on an intangible asset related to the acquisition of Ardea Biosciences, Inc. in 2012, following the decision to discontinue the development of verinurad. Core R&D Expense increased in the year to date by 34% (30% at CER) to $5,591m with increases in both Reported and Core R&D Expense reflecting the Company's continued investment in its COVID-19 vaccine and AZD7442, and other costs related to COVID-19, such as personal protective equipment and colleague COVID-19 testing across the Company. The increases also reflected the investment in several late-stage Oncology trials and the advancement of a number of Phase II clinical development programmes in BioPharmaceuticals, mainly in CVRM. In the year to date, grant income of $451m has been recognised, of which $281m has been offset against the US clinical trial costs for AZD1222 and $170m offset against costs for AZD7442.

Reported SG&A Expense increased in the year to date by 25% (21% at CER) to $10,117m including the increased amortisation of intangible assets related to the Alexion acquisition. Core SG&A Expense increased by 19% (14% at CER) to $7,736m, reflecting the investment in Oncology-medicine launches, the launch of several new BioPharmaceuticals medicines, particularly in the US, AstraZeneca's further expansion in Emerging Markets, and the existing infrastructure base in China.

Restructuring charges primarily comprise supply chain restructuring charges, exit costs for de-prioritised R&D projects, and severance payments.

c) Other Operating Income and Expense

Reported and Core Other Operating Income and Expense increased in the year to date by 51% (50% at CER) to $1,345m and $1,346m respectively, and included:

- Income from the divestment of AstraZeneca's 26.7% share of Viela as part of the acquisition by Horizon Therapeutics plc. AstraZeneca received cash proceeds and profit of $776m upon closing with the profit being recorded as other operating income

- $309m of income from an agreement with Grünenthal to divest commercial rights to Crestor in over 30 countries in Europe, except in the UK and Spain

d) Net Finance Expense

Reported Net Finance Expense increased in the year to date by 2% (stable at CER) to $922m, principally reflecting lower interest income on cash and cash equivalents driven by lower interest rates, financing costs related to the facilities and debt for the Alexion transaction, partly offset by lower discount unwind costs on acquisition-related liabilities, including the Diabetes Alliance. Core Net Finance Expense increased in the year to date by 9% (10% at CER) to $628m and was principally driven by the aforementioned lower interest income and Alexion-related financing costs.

e) Taxation

The Reported Tax Rate for the year to date was -24% (YTD 2020: 22%), and the Core Tax Rate was 17% (YTD 2020: 21%). These tax rates benefitted from the following one-off favourable impacts which arose in prior quarters:

- A non-taxable gain on the divestment of the investment in Viela Bio, Inc. (Viela); and

- A reduction of tax liabilities arising from updates to estimates of prior period tax liabilities following settlements with tax authorities partially offset by a tax charge on recalculation of UK deferred tax balances following substantive enactment of the UK Corporation Tax rate increase

Excluding these net benefits, the Core Tax Rate would have been approximately 21%. The Reported tax rate for the year to date has been impacted by the above and the level of Reported Profit Before Tax.

The net cash tax paid in the year to date was $1,198m (YTD 2020: $1,221m).

f) EPS

Reported EPS in the year to date declined 80% (65% at CER) to $0.33. Core EPS increased by 22% (23% at CER) to $3.59. Reported and Core EPS were adversely affected by $0.03 due to the pandemic COVID-19 vaccine.

Table 18: Cash Flow Summary

The increase in Net Cash Inflow from Operating Activities of $1,544m was primarily driven by the decrease in working capital, of which $497m related to the movement in pandemic COVID-19 vaccine working capital balances within trade and other payables, trade and other receivables and inventories in the year to date, with the key movement being a $298m increase in vaccine contract liabilities to $1,914m as at 30 September 2021.

The decrease in Net Cash (Outflow)/Inflow before Financing activities of $8,178m is principally due to the Alexion acquisition, specifically the upfront payment of $13,349m, less cash and cash equivalents acquired of $4,086m, and $203m of payments upon vesting of employee share awards. This decrease is partially offset by the aforementioned improvement in Net Cash Inflow from Operating Activities.

Capital Expenditure

Capital Expenditure amounted to $768m in the year to date (YTD 2020: $598m). This included investment in the new AstraZeneca R&D centre on the Biomedical Campus in Cambridge, UK, to which a number of colleagues have begun relocation.

The Company anticipates an increase in Capital Expenditure, partly driven by an expansion in its capacity for growth across several limited-sized projects.

Table 19: Net Debt summary