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AstraZeneca’s (AZN - Free Report) second-quarter 2024 core earnings of 99 cents per American depositary share (ADS) beat the Zacks Consensus Estimate of 96 cents. Core earnings of $1.98 per share fell 8% year over year on a reported basis and 3% at constant exchange rates (CER).
Total revenues of $12.94 billion rose 13% on a reported basis and 17% at CER, driven by rising product sales and continued growth in Alliance revenues from partnered medicines. Revenues also beat the Zacks Consensus Estimate of $12.48 billion.
All growth rates mentioned below are on a year-over-year basis and at CER.
Quarter in Detail
Product sales rose 18% to $12.45 billion, driven by sales of key drugs across various therapeutic areas. Oncology product sales were up 19%, while Cardiovascular, Renal and Metabolism (CVRM) product sales rose 22%. The Respiratory & Immunology (R&I) segment rose 26%. Vaccines & Immune (V&I) therapies sales declined 53%. Rare disease product sales were up 14%. Sales of other medicines were down 5%.
Alliance revenues rose 42% to $482 million, driven by continued growth in revenues from partnered medicines. These revenues included $344 million from Daiichi Sankyo for Enhertu and $104 million of AstraZeneca’s share of gross profits in the United States from partner Amgen (AMGN - Free Report) for Tezspire.
Collaboration revenues were $4 million in the quarter, down 98%, generated entirely from the achievement of a sales-related milestone for Farxiga. In the year-ago period, the company had generated $180 million as license fees for COVID-19 monoclonal antibodies.
Sales of Some Key Drugs
In Oncology, Tagrisso recorded sales of $1.61 billion, up 12%, on strong demand as a first-line and adjuvant treatment. This upside was partially offset by mandatory price reductions in Japan. Tagrisso sales beat the Zacks Consensus Estimate of $1.60 billion but missed our model estimate of $1.64 billion.
Imfinzi generated sales of $1.15 billion in the quarter, up 18%, driven by increased use in recent launches like biliary tract and hepatocellular carcinoma cancers and rising patient demand across SCLC and Stage IV NSCLC indications. Imfinzi sales missed the Zacks Consensus Estimate of $1.21 billion and our estimate of $1.25 billion.
Lynparza product revenues rose 7% to $744 million, driven by increased global demand for the drug across all approved indications. Lynparza sales missed the Zacks Consensus Estimate and our estimate of $760 million and $782 million, respectively.
AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . During the quarter, AstraZeneca did not recognize any collaboration revenues from partner Merck related to Lynparza.
In CVRM, Farxiga recorded product sales of $1.94 billion in the quarter, up 32% year over year, reflecting accelerated volume growth compared with the overall SGLT2 inhibitor class in general. The label expansion approvals for heart failure and chronic kidney disease (CKD) indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing solid growth despite generic competition. Farxiga sales beat the Zacks Consensus Estimate and our model estimate, both of which stood at $1.78 billion.
Management also generated $16 million from product sales of the recently launched Wainua, which was approved by the FDA last year in December for treating polyneuropathy caused by hereditary transthyretin-mediated amyloidosis.
In R&I, Symbicort sales rose 25% in the quarter to $722 million, driven by strong underlying demand in the United States and Emerging markets. Pulmicort sales rose 30% to $155 million.
Fasenra recorded sales of $423 million in the quarter, up 5% year over year. Though the drug’s sales missed the Zacks Consensus Estimate of $425 million, it beat our model estimate of $420 million.
The new lupus drug, Saphnelo, recorded sales of $112 million in the quarter, up 65%, driven by demand growth in the U.S. market and ongoing launches in Europe and Japan.
Tezspire, which AstraZeneca markets in partnership with Amgen, recorded product sales of $57 million compared with $43 million in the previous quarter. Amgen records sales in the United States and AstraZeneca records its share of U.S. gross profits as Alliance Revenue. AstraZeneca books Product Sales in markets outside the United States.
In the Rare Disease portfolio, Soliris recorded sales of $700 million, down 8% year over year due to conversion to Ultomiris. Soliris sales beat the Zacks Consensus Estimate of $698 million and our model estimate of $699 million.
Ultomiris revenues were $946 million, up 36%, driven by growth in neurology indications, geographic expansions in new markets and continued conversion from Soliris.
In the V&I segment, AstraZeneca recorded $28 million as Beyfortus product sales from products supplied to partner Sanofi (SNY - Free Report) . AstraZeneca and Sanofi’s RSV antibody Beyfortus was approved in the United States for the prevention of lower respiratory tract infection in newborns and infants last year.
AstraZeneca also recorded $7 million under Alliance revenues, which comprised its 50% share of gross profits on sales of Beyfortus in major markets outside the United States, received from Sanofi.
Profit Discussion
AstraZeneca’s core gross margin of 83% remained flat at CER. Per management, the dilutive effect from profit-sharing arrangements and below-average margins in Emerging markets was offset by a positive mix due to increased contributions from oncology and rare disease medicines.
Core selling, general and administrative expenses increased 16% at CER to $3.74 billion due to market development for recent launches and pre-launch activities.
Core research and development expenses rose 13% to $2.87 billion due to increasing investment in the pipeline. The core operating margin was 32% in the quarter, down 5 percentage points on a CER basis.
2024 Guidance
Management raised its financial guidance for 2024. It expects total revenues and core earnings per share by a mid-teens percentage at CER compared with the previous guidance of an increase in the low double-digit to low teens percentage.
However, this upgraded guidance does not assume an increase in collaboration revenues. Before this revision, management expected a substantial increase in collaboration revenues.
Management reiterated the impact of foreign exchange rates on sales and core EPS in 2024. It expects to incur a low single-digit percentage adverse impact on total revenues and a mid-single-digit percentage adverse impact on core EPS.
Our Take
AstraZeneca’s second-quarter results were better than expected, as it beat estimates for earnings and sales. Revenues across all segments, excluding V&I, clocked double-digit percentage growth in quarterly sales. Based on the strong demand for its marketed drugs experienced in the first half of this year, management raised its top- and bottom-line guidance.
Shares of AstraZeneca were down nearly 5% in pre-market trading on Thursday, likely due to softer sales performance of key oncology drugs like Imfinzi and Lynparza, which missed expectations. A rise in operating expenses also dented the company’s bottom line.
Year to date, the stock has increased 18.3% compared with the industry’s 20.0% rise.
Image Source: Zacks Investment Research
The company has been investing in building its pipeline and marketing new launches. In May, AstraZeneca announced its plans to spend $1.5 billion to build its first manufacturing facility in Singapore. Once built, it will be the company’s first facility to cover the full manufacturing process for its antibody drug conjugates (ADCs) portfolio at a commercial scale.
Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. The company expects to generate $80 billion in total revenues by 2030. By the said time frame, management intends to launch 20 new medicines. In this regard, it is exploring modalities such as cell, gene and RNA therapies, epigenetics and oligonucleotides to identify new treatment approaches.
Image: Bigstock
AstraZeneca (AZN) Beats on Q2 Earnings & Sales, Ups '24 View
AstraZeneca’s (AZN - Free Report) second-quarter 2024 core earnings of 99 cents per American depositary share (ADS) beat the Zacks Consensus Estimate of 96 cents. Core earnings of $1.98 per share fell 8% year over year on a reported basis and 3% at constant exchange rates (CER).
Total revenues of $12.94 billion rose 13% on a reported basis and 17% at CER, driven by rising product sales and continued growth in Alliance revenues from partnered medicines. Revenues also beat the Zacks Consensus Estimate of $12.48 billion.
All growth rates mentioned below are on a year-over-year basis and at CER.
Quarter in Detail
Product sales rose 18% to $12.45 billion, driven by sales of key drugs across various therapeutic areas. Oncology product sales were up 19%, while Cardiovascular, Renal and Metabolism (CVRM) product sales rose 22%. The Respiratory & Immunology (R&I) segment rose 26%. Vaccines & Immune (V&I) therapies sales declined 53%. Rare disease product sales were up 14%. Sales of other medicines were down 5%.
Alliance revenues rose 42% to $482 million, driven by continued growth in revenues from partnered medicines. These revenues included $344 million from Daiichi Sankyo for Enhertu and $104 million of AstraZeneca’s share of gross profits in the United States from partner Amgen (AMGN - Free Report) for Tezspire.
Collaboration revenues were $4 million in the quarter, down 98%, generated entirely from the achievement of a sales-related milestone for Farxiga. In the year-ago period, the company had generated $180 million as license fees for COVID-19 monoclonal antibodies.
Sales of Some Key Drugs
In Oncology, Tagrisso recorded sales of $1.61 billion, up 12%, on strong demand as a first-line and adjuvant treatment. This upside was partially offset by mandatory price reductions in Japan. Tagrisso sales beat the Zacks Consensus Estimate of $1.60 billion but missed our model estimate of $1.64 billion.
Imfinzi generated sales of $1.15 billion in the quarter, up 18%, driven by increased use in recent launches like biliary tract and hepatocellular carcinoma cancers and rising patient demand across SCLC and Stage IV NSCLC indications. Imfinzi sales missed the Zacks Consensus Estimate of $1.21 billion and our estimate of $1.25 billion.
Lynparza product revenues rose 7% to $744 million, driven by increased global demand for the drug across all approved indications. Lynparza sales missed the Zacks Consensus Estimate and our estimate of $760 million and $782 million, respectively.
AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . During the quarter, AstraZeneca did not recognize any collaboration revenues from partner Merck related to Lynparza.
In CVRM, Farxiga recorded product sales of $1.94 billion in the quarter, up 32% year over year, reflecting accelerated volume growth compared with the overall SGLT2 inhibitor class in general. The label expansion approvals for heart failure and chronic kidney disease (CKD) indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing solid growth despite generic competition. Farxiga sales beat the Zacks Consensus Estimate and our model estimate, both of which stood at $1.78 billion.
Management also generated $16 million from product sales of the recently launched Wainua, which was approved by the FDA last year in December for treating polyneuropathy caused by hereditary transthyretin-mediated amyloidosis.
In R&I, Symbicort sales rose 25% in the quarter to $722 million, driven by strong underlying demand in the United States and Emerging markets. Pulmicort sales rose 30% to $155 million.
Fasenra recorded sales of $423 million in the quarter, up 5% year over year. Though the drug’s sales missed the Zacks Consensus Estimate of $425 million, it beat our model estimate of $420 million.
The new lupus drug, Saphnelo, recorded sales of $112 million in the quarter, up 65%, driven by demand growth in the U.S. market and ongoing launches in Europe and Japan.
Tezspire, which AstraZeneca markets in partnership with Amgen, recorded product sales of $57 million compared with $43 million in the previous quarter. Amgen records sales in the United States and AstraZeneca records its share of U.S. gross profits as Alliance Revenue. AstraZeneca books Product Sales in markets outside the United States.
In the Rare Disease portfolio, Soliris recorded sales of $700 million, down 8% year over year due to conversion to Ultomiris. Soliris sales beat the Zacks Consensus Estimate of $698 million and our model estimate of $699 million.
Ultomiris revenues were $946 million, up 36%, driven by growth in neurology indications, geographic expansions in new markets and continued conversion from Soliris.
In the V&I segment, AstraZeneca recorded $28 million as Beyfortus product sales from products supplied to partner Sanofi (SNY - Free Report) . AstraZeneca and Sanofi’s RSV antibody Beyfortus was approved in the United States for the prevention of lower respiratory tract infection in newborns and infants last year.
AstraZeneca also recorded $7 million under Alliance revenues, which comprised its 50% share of gross profits on sales of Beyfortus in major markets outside the United States, received from Sanofi.
Profit Discussion
AstraZeneca’s core gross margin of 83% remained flat at CER. Per management, the dilutive effect from profit-sharing arrangements and below-average margins in Emerging markets was offset by a positive mix due to increased contributions from oncology and rare disease medicines.
Core selling, general and administrative expenses increased 16% at CER to $3.74 billion due to market development for recent launches and pre-launch activities.
Core research and development expenses rose 13% to $2.87 billion due to increasing investment in the pipeline. The core operating margin was 32% in the quarter, down 5 percentage points on a CER basis.
2024 Guidance
Management raised its financial guidance for 2024. It expects total revenues and core earnings per share by a mid-teens percentage at CER compared with the previous guidance of an increase in the low double-digit to low teens percentage.
However, this upgraded guidance does not assume an increase in collaboration revenues. Before this revision, management expected a substantial increase in collaboration revenues.
Management reiterated the impact of foreign exchange rates on sales and core EPS in 2024. It expects to incur a low single-digit percentage adverse impact on total revenues and a mid-single-digit percentage adverse impact on core EPS.
Our Take
AstraZeneca’s second-quarter results were better than expected, as it beat estimates for earnings and sales. Revenues across all segments, excluding V&I, clocked double-digit percentage growth in quarterly sales. Based on the strong demand for its marketed drugs experienced in the first half of this year, management raised its top- and bottom-line guidance.
Shares of AstraZeneca were down nearly 5% in pre-market trading on Thursday, likely due to softer sales performance of key oncology drugs like Imfinzi and Lynparza, which missed expectations. A rise in operating expenses also dented the company’s bottom line.
Year to date, the stock has increased 18.3% compared with the industry’s 20.0% rise.
Image Source: Zacks Investment Research
The company has been investing in building its pipeline and marketing new launches. In May, AstraZeneca announced its plans to spend $1.5 billion to build its first manufacturing facility in Singapore. Once built, it will be the company’s first facility to cover the full manufacturing process for its antibody drug conjugates (ADCs) portfolio at a commercial scale.
Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. The company expects to generate $80 billion in total revenues by 2030. By the said time frame, management intends to launch 20 new medicines. In this regard, it is exploring modalities such as cell, gene and RNA therapies, epigenetics and oligonucleotides to identify new treatment approaches.
AstraZeneca PLC Price
AstraZeneca PLC price | AstraZeneca PLC Quote
Zacks Rank
Currently, AstraZeneca has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.