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AstraZeneca PLC (AZN)

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Thursday 04 February, 2016

AstraZeneca PLC

AstraZeneca Full-Year and Q4 2015 Results

RNS Number : 0427O
AstraZeneca PLC
04 February 2016
 

4 February 2016

Full-Year and Q4 2015 Results

 

Financial Summary


FY 2015


Q4 2015


$m

% change


$m

% change



CER1

Actual



CER1

Actual

Total Revenue2

24,708

1

(7)


6,399

2

(5)









Core3 Op. Profit

6,902

6

(1)


1,556

28

31

Core EPS

$4.26

7

-


$0.94

22

26









Reported Op. Profit

4,114

100

93


1,088

n/m4

n/m4

Reported EPS

$2.23

137

128


$0.63

n/m4

n/m4

 

·    Core EPS in the year up by 7% and by 22% in Q4 2015

·    Total Revenue growth of 1% in the year, with the gross margin on Product Sales up by 1% point

·   Top-line and gross-margin growth underpinned continued investment in R&D. Core R&D costs up by 21% in the year, reflecting the investment in the pipeline

·    Core SG&A costs down by 2% in the year (Q4 2015: down by 11%), in line with commitments

·    Reported EPS in the year up by 137%, at $0.63 in Q4 2015 (Q4 2014: loss per share of $0.25)

·   A second interim dividend of $1.90 per share, bringing the dividend for the full year to $2.80; the Board reaffirms its commitment to the progressive dividend policy 

·   FY 2016 CER guidance - a low to mid single-digit percentage decline in Total Revenue and a low to mid single-digit percentage decline in Core EPS; includes dilutive effects from recent transactions

 

FY 2015 Commercial Highlights

The Growth Platforms grew by 11% in the year, representing 57% of Total Revenue. 'New Oncology' is included for the first time, reflecting its long-term importance for the Company's future growth:

1.   Respiratory: +7%, before completion of the acquisition of Takeda's Respiratory business

2.   Brilinta/Brilique: +44%, underpinned by a recently-extended US label and positive CHMP opinion

3.   Diabetes: +26%, including +76% in Emerging Markets. Global Farxiga/Forxiga growth of 137%

4.   Emerging Markets: +12%, including China and Latin America each growing by 15%

5.   Japan: +4%, including +8% in Q4 2015

6.   New Oncology: Contributed $119m, comprising Lynparza, Iressa (US) and Tagrisso

 

Achieving Scientific Leadership: Progress since the last results announcement

Regulatory Approvals

Zurampic (lesinurad) - gout (US)

Tagrisso (osimertinib, formerly AZD9291) - lung cancer (US, EU)

Regulatory Submission Acceptances

brodalumab - psoriasis (US, EU)

ZS-9 - hyperkalaemia (EU)

Other Key Developments

CHMP positive opinions (EU):

Zurampic, Brilique - prior MI (PEGASUS trial), Tagrisso

 

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

"We delivered a strong pipeline and financial performance in 2015 as we begin the next phase in our strategic journey. The Growth Platforms delivered an 11% rise in Product Sales that, along with the 7% increase in Core EPS, demonstrated the underlying strength of our business. Our culture of innovation continued to drive R&D productivity, with six regulatory approvals in the year. This momentum will continue in 2016 as we anticipate six regulatory submissions and around ten major data readouts. We strengthened the strategic importance of Oncology, bringing to patients next-generation therapies such as Tagrisso in lung cancer and Lynparza in ovarian cancer, as well as a promising immuno-oncology pipeline. Alongside this organic progress, we also continued to invest in our main therapy areas through key agreements with Acerta Pharma, ZS Pharma, and Takeda.

 

As we face the transitional period of patent expiry for Crestor in the US, we're confident that our strong execution on strategy, combined with the benefits of focused investments and new launches, keeps us on track to return to sustainable growth in line with our targets."

 

FY 2016 Guidance

All guidance is shown at CER1.

 

Total Revenue

A low to mid single-digit percentage decline

Core Earnings Per Share

A low to mid single-digit percentage decline

 

The above guidance incorporates the dilutive effects arising from the Acerta Pharma and ZS Pharma transactions announced in 2015.

 

The guidance also assumes the loss of exclusivity for Crestor in the US from May 2016. Externalisation Revenue is expected to be ahead of that in FY 2015, including an increasing element of recurring income arising from prior agreements. This is in line with the Company's long-term business model.

 

Core R&D costs are expected to be at a similar level to FY 2015. The Company is also committed to materially reducing Core SG&A costs in FY 2016. These measures are based on constant exchange rates.

 

Currency Impact

The weakness of key trading currencies against the US dollar has continued. Based on average exchange rates in January 2016 and the Company's published currency sensitivities, an adverse impact of around 3% from currency movements on Total Revenue and Core EPS in FY 2016 would be anticipated. Further details on currency sensitivities are contained within the Operating and Financial Review.

 

Pipeline: Forthcoming Major Newsflow

Innovation is critical to addressing unmet medical need and is at the heart of the Company's growth strategy. The focus on research and development at AstraZeneca is anticipated to yield a productive year for the pipeline, particularly in Oncology:

 

H1 2016

 

Zurampic: Regulatory decision (EU)

PT003 - COPD: Regulatory decision (US)

benralizumab - severe asthma: Data readout

 

Brilinta/Brilique - stroke: Data readout, regulatory submission

saxagliptin/dapagliflozin - type-2 diabetes: Regulatory submission (US)

ZS-9: Regulatory decision (US)

 

Tagrisso: Regulatory decision (JP)

tremelimumab - mesothelioma: Data readout

Lynparza - gastric cancer: Data readout

 

H2 2016

 

benralizumab - severe asthma: Regulatory submission (US, EU)

 

Brilinta/Brilique - peripheral arterial disease: Data readout

saxagliptin/dapagliflozin: Regulatory decision (EU)

roxadustat - anaemia: Rolling regulatory submission (CN)

 

Lynparza - ovarian cancer: Data readout

Lynparza - breast cancer: Data readout

tremelimumab - mesothelioma: Regulatory submission

cediranib - ovarian cancer: Regulatory decision (EU)
durvalumab - head & neck cancer: Data readout

acalabrutinib - blood cancer: Data readout, regulatory submission (US)

selumetinib - lung cancer: Data readout

 

CAZ AVI - serious infections: Regulatory decision (EU)

 

Notes

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

2.   Total Revenue defined as Product Sales and Externalisation Revenue.

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

4.   Q4 2014 results reflected a Reported Operating Loss of $349m and a Reported Loss Per Share of $0.25; a percentage comparison to the Reported results in Q4 2015 is not meaningful.

 

The performance shown in this announcement covers the twelve and three month periods to 31 December 2015 (the year and the quarter respectively) compared to the twelve and three month periods to 31 December 2014 (the prior year and the prior quarter respectively).

 

Results Presentation

A presentation and accompanying live webcast for investors and analysts, hosted by management, will begin at midday GMT today. Details can be accessed via www.astrazeneca.com/investors.

Reporting Calendar

The Company intends to publish its first-quarter financial results on 29 April 2016.

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 diseases in three main therapy areas - Respiratory, Inflammation and Autoimmunity (RIA), Cardiovascular and Metabolic Disease (CVMD) and Oncology - as well as in Infection and Neuroscience. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. For more information, please visit: www.astrazeneca.com.

 

Contacts at AstraZeneca

Media Enquiries

 



 

Esra Erkal-Paler

 

UK/Global

+44 20 7604 8030

Neil Burrows

UK/Global

+44 20 7604 8032

Vanessa Rhodes

 

UK/Global

+44 20 7604 8037

Karen Birmingham

UK/Global

+44 20 7604 8120

Jacob Lund

 

Sweden

+46 8 553 260 20

Michele Meixell

US

+1 302 885 2677

 

Investor Enquiries

 

UK


Thomas Kudsk Larsen

 

+44 7818 524185

Eugenia Litz

RIA

+44 7884 735627

Nick Stone

CVMD

+44 7717 618834

Craig Marks

Finance

+44 7881 615764

Christer Gruvris

Consensus Forecasts

+44 7827 836825

US



Lindsey Trickett

Oncology, ING

+1 240 543 7970

Mitchell Chan

Oncology

+1 240 477 3771

Toll-Free


+1 866 381 7277

 

Key: RIA - Respiratory, Inflammation & Autoimmunity, CVMD - Cardiovascular & Metabolic Disease,

ING - Infection, Neuroscience & Gastrointestinal

 

Operating and Financial Review

_____________________________________________________________________________

 

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 in this announcement covers the twelve and three-month periods to 31 December 2015 (the year and the fourth quarter respectively) compared to the twelve and three months to 31 December 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 increased by 1% to $24,708m in the year, comprising Product Sales of $23,641m (down by 1%) and Externalisation Revenue of $1,067m (up by 140%). Based on actual exchange rates, Total Revenue declined by 7% in the year, reflecting the particular weakness of key trading currencies against the US dollar.

 

Product Sales

The decline in Product Sales was primarily driven by the US market entry of Nexium generic products from February 2015, as well as full-year adverse impacts from Synagis guideline changes in 2014 and the change in accounting for the US Branded Pharmaceutical Fee, following issuance of final regulations in 2014.

 

Within Product Sales, the Growth Platforms grew by 11% in the year, representing 57% of Total Revenue. 'New Oncology' is included for the first time, given its long-term importance for the Company's future growth:

 


FY 2015

Q4 2015

Growth Platform

Product Sales ($m)

% CER change

Product Sales ($m)

% CER change

Respiratory

4,987

7

1,289

4

Brilinta/Brilique

619

44

174

43

Diabetes

2,224

26

585

24

Emerging Markets

5,822

12

1,428

10

Japan

2,020

4

541

8

New Oncology

119

n/m

57

n/m






TOTAL1

14,003

11

3,588

11

1 Total Product Sales for Growth Platforms adjusted to remove duplication on a product and regional basis.

 

 

Externalisation Revenue

Externalisation Revenue of $1,067m for the year (Q4 2015: $192m) primarily reflected income generated from a strategic collaboration in haematology with Celgene Corporation (upfront receipt of $450m) and a co-development and co-commercialisation arrangement with Daiichi Sankyo Co., Ltd. (Daiichi Sankyo) for Movantik in the US (upfront receipt of $200m). Other Externalisation Revenue reflected a number of collaboration agreements, including the acceleration of the development of brodalumab with Valeant Pharmaceuticals International, Inc. (upfront receipt of $100m) and the co-commercialisation of Nexium in Japan (milestone income of $123m) with Daiichi Sankyo.

 

Product Sales

________________________________________________________________________________

 

The performance of a selection of key medicines is shown below. A geographical split of the performance is shown in Notes 8 and 9.

 


FY 2015


Q4 2015



% Change



% Change


$m

CER

Actual


$m

CER

Actual









Respiratory, Inflammation & Autoimmunity








Symbicort

3,394

(3)

(11)


859

(6)

(12)

Pulmicort

1,014

15

7


274

9

2

Tudorza/Eklira

190

n/m

n/m


47

n/m

n/m

Daliresp

104

n/m

n/m


32

n/m

n/m

Duaklir

27

n/m

n/m


12

n/m

n/m









Others

258

(5)

(15)


65

(4)

(14)

TOTAL

4,987

7

(2)


1,289

4

(4)









Cardiovascular & Metabolic Disease








Brilinta/Brilique

619

44

30


174

43

31

Onglyza

786

2

(4)


192

3

(4)

Bydureon

580

35

32


155

28

26

Farxiga/Forxiga

492

137

119


152

76

63

Byetta

316

2

(3)


72

10

4









Legacy:








Crestor

5,017

(3)

(9)


1,322

-

(5)

Seloken/Toprol-XL

710

4

(6)


160

5

(8)

Atacand

358

(15)

(29)


86

(15)

(26)









Others

611

(10)

(18)


147

(9)

(17)

TOTAL

9,489

4

(3)


2,460

6

(1)









Oncology








Iressa

543

(2)

(13)


129

(5)

(14)

Lynparza

94

n/m

n/m


36

n/m

n/m

Tagrisso

19

n/m

n/m


18

n/m

n/m









Legacy:








Zoladex

816

7

(12)


198

4

(13)

Faslodex

704

9

(2)


185

12

2

Casodex

267

(6)

(17)


63

(7)

(15)

Arimidex

250

(5)

(16)


60

(1)

(12)









Others

132

6

(7)


27

(26)

(33)

TOTAL

2,825

7

(7)


716

9

(3)

Infection, Neuroscience & Gastrointestinal








Nexium

2,496

(26)

(32)


564

(26)

(32)

Seroquel XR

1,025

(12)

(16)


241

(18)

(22)

Synagis

662

(26)

(26)


275

(32)

(32)

Losec/Prilosec

340

(10)

(19)


77

(23)

(30)

FluMist/Fluenz

288

-

(2)


191

46

43

Movantik/Moventig

29

n/m

n/m


15

n/m

n/m









Others

1,500

-

(12)


379

25

11

TOTAL

6,340

(16)

(23)


1,742

(13)

(18)









TOTAL PRODUCT SALES

23,641

(1)

(9)


6,207

-

(7)

 

FY 2015 Product Sales Summary

________________________________________________________________________________

 

During 2014, final regulations relating to the US Branded Pharmaceutical Fee were issued, affecting how the fee is recognised. AstraZeneca accrues for the obligation as each sale occurs, and, as under the final guidelines 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, impacting individual medicine sales in the US by an average of 2%.

 

Respiratory, Inflammation & Autoimmunity

 

Symbicort

FY 2015 sales declined by 3% to $3,394m.

 

In the US, sales of $1,520m represented growth of 1%, with lower net prices reflecting additional access and co-pay assistance. Strong volume growth was driven by higher market share within a growing market.

 

In Europe, sales declined by 14% to $1,076m with a modest volume decline and a significant price decline reflecting increased competition from recently-launched analogue medicines. In contrast, Emerging Markets sales grew by 22% to $394m with China sales growing by 38% to $124m, primarily reflecting volume growth.

 

Pulmicort

Pulmicort sales in the year were $1,014m, an increase of 15%. Growth was driven primarily by the performance of Pulmicort Respules in Emerging Markets, where Pulmicort sales grew by 35% to $609m. China sales increased by 43% to $485m, reflecting sustained investment in supporting asthma and chronic obstructive pulmonary disease (COPD) patients, both in hospitals and at home.

 

Tudorza/Eklira

Sales in the year were $190m; over half of the medicine's sales were in the US, where the brand name is Tudorza. In March 2015, the Company completed the acquisition of the Actavis plc (Actavis) rights to the product.

 

Daliresp

Rights were acquired in March 2015 from Actavis for Daliresp in the US and Canada. Sales were $104m in the year.

 

Duaklir

Duaklir was successfully launched in the year, principally in Europe. Sales of $27m reflected good progress of this leading LAMA/LABA medicine, with an encouraging formulary uptake in the UK and a strong market-share performance in Germany.

 

The encouraging performances of Tudorza/Eklira, Daliresp and Duaklir under the Company's ownership were in line with expectations.

 

Cardiovascular & Metabolic Disease

 

Brilinta/Brilique

Sales in the year were $619m, an increase of 44%. AstraZeneca announced in H2 2015 that the US Food and Drug Administration (FDA) had approved Brilinta tablets at a new 60mg dose to be used in patients with a history of heart attack beyond the first year of treatment.

 

FY 2015 sales in the US increased by 64% to $240m. The expanded indication launched in the second half of the year, underpinned ongoing new-to-brand prescription share growth, with share standing at 12% at the end of the year; this represented a four percentage point increase in the twelve-month period.

 

In Europe, Brilique continued to perform strongly, with an increase in full-year sales of 18% to $230m, reflecting indication leadership across a number of markets. Emerging Markets sales grew by 91% to $112m, with China representing the largest single market for the medicine, where sales were up by 160% to $38m.

 

Onglyza

Sales were up 2% in the year to $786m, with sales in Q4 2015 increasing by 3%.

 

US sales in the year declined by 13% to $420m as a consequence of a greater emphasis on the promotion of Farxiga. Competitive pressures in the DPP-4 class drove lower volumes and a decline in the net price.

 

Sales in Europe grew by 8% to $141m, while Emerging Markets sales increased by 41% to $159m.

 

Farxiga/Forxiga

Sales of Farxiga/Forxiga were up 137% in the year to $492m.

 

In the US, sales of $261m represented growth of 114%. Promotional activity underpinned increasing total-prescription market-share growth in the year; this was accompanied by overall growth in the market.

 

Sales in Europe reached $126m in the year, up by 126%. Launches of Forxiga in the year in a number of international markets, such as Australia, have been successful.

 

Bydureon/Byetta

Combined sales were $896m in the year, representing growth of 21%; Bydureon represented approximately 65% of total Bydureon/Byetta sales.

 

In the US, sales were $691m, up by 21%, with higher volumes driven by market growth and higher net prices. The majority of the remaining sales of Bydureon/Byetta were in Europe, totalling $143m; Bydureon sales in Europe grew by 65% to $81m, reflecting the Company's ongoing effort to expand its Diabetes presence.

 

Legacy: Crestor

Sales of Crestor declined in the year by 3% to $5,017m; pricing was stable. The volume performance primarily reflected ongoing competition from generic statins.

 

In the US, Crestor sales declined by 3% to $2,844m, driven by lower market share and destocking, partially offset by favourable price movements.

 

In Europe, sales declined by 9% to $916m, reflecting prevailing competitive trends. Crestor consolidated its position as the leading statin in Japan, with sales growth in the year of 8% to $468m. Sales in China grew by 13% to $258m.

 

Oncology

 

Iressa

Sales of Iressa in the year declined by 2% to $543m, driven by the competitive environment in Europe where sales were down by 8% to $128m; Japan sales declined by 13% to $121m. Following the US launch in July 2015, Iressa saw an encouraging number of new-patient starts.

 

Emerging Markets sales grew by 4% to $272m, with China sales increasing by 5% to $146m and Latin America sales increasing by 17% to $11m.

 

Lynparza

Sales of Lynparza reached $94m in 2015. US sales of $70m followed the launch of the medicine in December 2014. Growth was driven by addressing the accumulated needs of eligible patients awaiting treatment, as well as patients newly tested for BRCA mutation. By the end of 2015, the medicine had been launched in 15 countries, including France and Germany.

 

Tagrisso

Sales of Tagrisso were $19m in 2015; the medicine was launched in November 2015 in the US with a strong performance in the number of new-patient starts.

 

Legacy: Zoladex

Sales increased by 7% to $816m, with a notable performance in China where sales reached $121m, reflecting growth of 29%.

 

Legacy: Faslodex

Sales were up 9% to $704m in 2015. US sales grew by 5% to $356m, accompanied by Europe sales of $207m, up by 2% in the year. The notable performance was in the Emerging Markets, where sales of $87m represented growth of 49%. Supported by the launch of 500mg Faslodex, China sales accelerated in the year to $11m (Q4 2015: growth of 100%, Q3 2015: growth of 50%). AstraZeneca Russia also achieved federal reimbursement for the medicine in the year.

 

Infection, Neuroscience & Gastrointestinal

 

Nexium

Sales of Nexium declined by 26% in the year to $2,496m.

 

US sales declined by 52% to $902m following the loss of exclusivity at the start of the year, directly impacting both pricing and volumes. Sales in Europe declined by 7% to $284m.

 

Nexium sales in Emerging Markets were up by 3% to $761m, with growth in Latin America of 18% to $127m. Japan sales increased by 30% in the year to $405m.

 

Seroquel XR

Sales declined by 12% in the year to $1,025m.

 

In the US, sales were down 3% at $716m. Sales in Europe declined by 30% to $202m, a function of generic-product competition.

 

Synagis

FY 2015 sales of Synagis declined by 26% to $662m.

 

A 43% decline in US sales in the year to $285m reflected the reduction in demand as a result of the American Academy of Pediatrics Committee on Infectious Disease guidelines issued in 2014. These guidelines were more restrictive than the approved label, which further reduced patients eligible for preventative therapy with Synagis.

 

FluMist/Fluenz

Sales in the year were stable at $288m. US sales declined by 6% to $206m, reflecting supply issues. In contrast, Europe sales increased by 16% to $76m.

 

Movantik/Moventig

Sales in the year totalled $29m (Q4 2015: $15m); the medicine was launched in March 2015. The majority of sales were in the US, where the Company announced a co-commercialisation agreement in 2015 with Daiichi Sankyo for Movantik.

 

Regional Product Sales

________________________________________________________________________________

 

 


FY 2015


Q4 2015

 

 



% Change



% Change

 

 


$m

CER

Actual


$m

CER

Actual

 

 

US

9,474

(6)

(6)


2,572

(3)

(3)

 

 









 

 

Europe

5,323

(6)

(19)


1,421

(7)

(17)

 

 









 

 

Established ROW1

3,022

-

(14)


786

4

(8)

 

 


Japan

2,020

4

(9)


541

8

-

 

 


Canada

533

4

(10)


134

2

(14)

 

 


Other Established ROW

469

(19)

(32)


111

(10)

(26)

 

 









 

 

Emerging Markets2

5,822

12

(1)


1,428

10

(4)

 

 


China

2,530

15

13


599

10

6

 

 


Ex. China

3,292

10

(9)


829

9

(10)

 

 









 

 

Total

23,641

(1)

(9)


6,207

-

(7)

 

1 Established ROW comprises Japan, Canada, Australia and New Zealand.

2 Emerging Markets comprises all remaining Rest of World markets, including Brazil, China, India, Mexico, Russia and Turkey.

 

US

US sales declined in the year by 6% to $9,474m. The US Branded Pharmaceutical Fee was recognised as a deduction from Product Sales in the year rather than as a charge to SG&A, impacting individual medicine sales by an average of around 2%.

 

The decline in sales in the US also reflected the entry of Nexium generic products from February 2015; Nexium sales in the US declined by 52% to $902m in the year. Adverse Synagis guideline changes were reflected in a 43% decline in US Synagis sales to $285m in the year.

 

Favourable performances were delivered by Brilinta, Farxiga, Bydureon and Lynparza as well as the acquired Respiratory medicines Tudorza and Daliresp. Tagrisso, launched earlier than originally anticipated in the fourth quarter, delivered an encouraging number of new-patient starts.

 

Continued growth in demand for Farxiga was supported by a strong promotional programme. Bydureon benefitted from the launch of the Bydureon Pen as well as growth in demand in the overall GLP-1 class.

 

Europe

Sales in Europe declined by 6% to $5,323m in the year. Strong growth from the Diabetes portfolio was more than offset by continued generic competition facing Crestor and Seroquel XR. A 14% decline in Symbicort sales to $1,076m reflected adverse pricing movements driven by competition from analogues in key markets. Duaklir more than doubled its first-half sales in the final quarter, bringing the full-year total to $26m. Lynparza was launched in Europe in 2015, contributing sales of $23m in the year.

 

Established ROW

Sales in the Established Rest Of World (ROW) were stable in the year at $3,022m.

 

Japan sales in the year increased by 4% to $2,020m. Sales of Crestor continued to grow strongly in the full year, up 8% to $468m. This reflected a continued increase in the usage of the 5mg dosage. Nexium sales rose by 30% to $405m, flattered by the impact of a product recall in FY 2014. Symbicort sales in the year fell by 2% to $176m in Japan, with a Q4 2015 sales decline of 16%. The strong performance in Q4 2014 reflected restocking. Underlying Symbicort sales growth in the year was estimated at around 5%. The Established ROW market share of Symbicort was broadly stable in the fourth quarter and over the full year.

 

Canada sales grew by 4% to $533m in the year, driven by the performances of Onglyza with sales up 27% to $53m and Symbicort sales increasing by 8% to $149m.

 

Emerging Markets

The Company continues to focus on delivering innovative medicines by accelerating investment in its Emerging Markets capabilities, with a focus on China and other leading markets, such as Russia and Brazil.

 

Emerging Markets sales in the year increased by 12% to $5,822m, with contributions to growth generated from across the region. Around 60% of Emerging Markets sales were derived outside of China in the year. Emerging Markets sales in the final quarter increased by 10% to $1,428m, ahead of the Company's long-term forecast of mid to high single-digit percentage growth in the region's Product Sales.

 

China sales in the year increased by 15% to $2,530m, while Brazil sales grew by 16% to $381m and Russia sales grew by 21% to $231m.

 

Financial Performance

________________________________________________________________________________

 

FY 2015

Reported

Restructuring

Intangible

Amortisation & Impairments

Diabetes Alliance

Other1

Core

% Change

FY

2015

FY 20142

CER

Actual

Product Sales

23,641

-

-

-

-

23,641

26,095

(1)

(9)

Externalisation Revenue

1,067

-

-

-

-

1,067

452

140

136

Total Revenue

24,708

-

-

-

-

24,708

26,547

1

(7)











Cost of Sales

(4,646)

158

369

-

-

(4,119)

(4,888)

(6)

(16)











Gross Profit

20,062

158

369

-

-

20,589

21,659

2

(5)

Gross Margin3

80.3%





82.6%

81.3%

+0.8

+1.3











Distribution

(339)

-

-

-

-

(339)

(324)

17

5

% Total Revenue

1.4%





1.4%

1.2%

-0.2

-0.2











R&D

(5,997)

258

136

-

-

(5,603)

(4,941)

21

13

% Total Revenue

24.3%





22.7%

18.6%

-3.8

-4.1











SG&A

(11,112)

618

921

54

254

(9,265)

(10,216)

(2)

(9)

% Total Revenue

45.0%





37.5%

38.5%

+1.1

+1.0











Other Operating Income

1,500

-

178

-

(158)

1,520

759

104

100

% Total Revenue

6.1%





6.2%

2.9%

+2.9

+3.3











Operating Profit

4,114

1,034

1,604

54

96

6,902

6,937

6

(1)

% Total Revenue

16.7%





27.9%

26.1%

+1.3

+1.8











Net Finance

Expense

(1,029)

-

-

409

115

(505)

(493)



Joint Ventures

(16)

-

-

-

-

(16)

(6)













Profit Before Tax

3,069

1,034

1,604

463

211

6,381

6,438

7

(1)

Taxation

(243)

(217)

(344)

(152)

(34)

(990)

(1,040)



Tax Rate

8%





16%

16%



Profit After Tax

2,826

817

1,260

311

177

5,391

5,398

7

-











Non-controlling Interests

(1)

-

-

-

-

(1)

(2)



Net Profit

2,825

817

1,260

311

177

5,390

5,396

7

-











Weighted Average Shares

1,264

1,264

1,264

1,264

1,264

1,264

1,262













Earnings Per Share

2.23

0.65

1.00

0.24

0.14

4.26

4.28

7

-

1 Other adjustments include provision charges and settlement income related to certain legal matters (see Note 7) and fair value adjustments to contingent consideration liabilities arising on business combinations (see Note 6).

2 2014 comparatives have been restated to reflect the reclassification of Externalisation Revenue from Other Operating Income.

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

4 All financial figures, except Earnings Per Share, are in $ millions ($m). Weighted Average Shares are in millions.

 

Q4 2015

Reported

Restructuring

Intangible

Amortisation & Impairments

Diabetes Alliance

Other1

Core

% Change

Q4 2015

Q4 20142

CER

Actual

Product Sales

6,207

-

-

-

-

6,207

6,683

-

(7)

Externalisation Revenue

192

-

-

-

-

192

33

490

482

Total Revenue

6,399

-

-

-

-

6,399

6,716

2

(5)











Cost of Sales

(1,269)

34

26

-

-

(1,209)

(1,359)

3

(11)











Gross Profit

5,130

34

26

-

-

5,190

5,357

2

(3)

Gross Margin3

79.6%





80.5%

79.7%

-0.7

+0.8











Distribution

(99)

-

-

-

-

(99)

(88)

23

13

% Total Revenue

1.5%





1.5%

1.3%

-0.3

-0.2











R&D

(1,746)

78

101

-

-

(1,567)

(1,360)

21

15

% Total Revenue

27.3%





24.5%

20.3%

-3.7

-4.2











SG&A

(2,668)

260

237

(270)

(20)

(2,461)

(2,953)

(11)

(17)

% Total Revenue

41.7%





38.5%

44.0%

+5.7

+5.5











Other Operating Income

471

-

22

-

-

493

228

100

116

% Total Revenue

7.4%





7.7%

3.4%

+3.2

+4.3











Operating Profit

1,088

372

386

(270)

(20)

1,556

1,184

28

31

% Total Revenue

17.0%





24.3%

17.6%

+4.8

+6.7











Net Finance

Expense

(279)

-

-

104

25

(150)

(112)



Joint Ventures

(7)

-

-

-

-

(7)

(4)













Profit Before Tax

802

372

386

(166)

5

1,399

1,068

29

31

Taxation

6

(78)

(97)

(11)

(20)

(200)

(119)



Tax Rate

(1)%





14%

11%



Profit After Tax

808

294

289

(177)

(15)

1,199

949

22

26











Non-controlling Interests

-

-

-

-

-

-

-



Net Profit

808

294

289

(177)

(15)

1,199

949

22

26











Weighted Average Shares

1,264

1,264

1,264

1,264

1,264

1,264

1,263













Earnings Per Share

0.63

0.24

0.23

(0.15)

(0.01)

0.94

0.76

22

26

1 Other adjustments include provision charges and settlement income related to certain legal matters (see Note 7) and fair value adjustments to contingent consideration liabilities arising on business combinations (see Note 6).

2 2014 comparatives have been restated to reflect the reclassification of Externalisation Revenue from Other Operating Income.

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

4 All financial figures, except Earnings Per Share, are in $ millions ($m). Weighted Average Shares are in millions.

 

Profit and Loss

Gross Profit

Core Gross Profit increased by 2% in the year to $20,589m. Excluding the impact of externalisation, the Core Gross-Profit margin increased by one percentage point. Drivers of the margin increase included the mix of Product Sales and manufacturing efficiencies.

 

Operating Expenses

Core R&D costs were up 21% in the year to $5,603m as the Company continued to focus on its pipeline. Oncology attracted over 40% of total Core R&D investment in the year, reflecting a number of active trials.

 

In line with commitments made in early 2015 to reduce Core SG&A costs for the full year, Core SG&A costs declined by 2% to $9,265m. Core SG&A costs also declined in the year by one percentage point as a proportion of Total Revenue. A number of ongoing programmes designed to address Core SG&A costs are progressing. These initiatives are focused on:

 

-      Sales, marketing and medical-cost effectiveness

-      Centralisation of selected functions and process improvements

-      Reduced third-party spend

-      Additional efficiencies gained across support functions and IT

-      Continued footprint optimisation, including presence in the UK and US

 

Resources will continue to be deployed selectively to meet changing customer needs and the evolving portfolio, while driving top-line growth.

 

Other Operating Income

Core Other Operating Income of $1,520m in the year increased by 104% and included:

 

·      $380m of income related to the disposal of the US rights to Entocort

·      $322m of royalty income arising from a number of agreements

·      $215m of income related to the disposal of the rest-of-world rights to Entocort

·      $193m of income related to the disposal of Myalept

·      $165m of income related to the disposal of Caprelsa

 

Operating Profit

Core Operating Profit increased by 6% to $6,902m in the year. The Core Operating Margin increased by one percentage point to 28% of Total Revenue. The increase reflected the decline in Core SG&A costs and the increase in Externalisation Revenue and Core Other Operating Income, while the Company continued to invest in the pipeline and the Growth Platforms.

 

Reported Operating Profit of $4,114m was $1,977m higher than FY 2014 principally due to the difference in Core adjustments between FY 2015 and FY 2014. Most significantly, fair value adjustments to contingent consideration relating to the Bristol-Myers Squibb Company (BMS) share of the global Diabetes alliance increased Reported Operating Profit by $378m in FY 2015, whereas fair value adjustments to contingent consideration reduced Reported Operating Profit by $529m in FY 2014. These fair value movements reflect estimates for future liabilities that can change materially over time. In addition, restructuring costs of $1,034m in FY 2015 were significantly lower than restructuring costs of $1,558m in FY 2014.

 

Finance Expense

The Core Net Finance Expense was $505m in the year, compared with $493m in FY 2014. The Reported Net Finance Expense of $1,029m included a charge of $524m relating to the discount unwind on contingent consideration liabilities recognised on business combinations, principally relating to the acquisition of the BMS share of the global Diabetes alliance.

 

Taxation

Excluding the previously disclosed one-off tax benefit of $186m following agreement of US federal tax liabilities of open years up to 2008, other net reductions in provisions for tax contingencies and non-Core revaluations of contingent consideration arising on business combinations, partially offset by the impact of internal transfers of intellectual property, the Core and Reported tax rates for the year ended 31 December 2015 were 21% and 22% respectively. Including the impact of these items, the Core and Reported tax rates for the year were 16% and 8% respectively. The cash tax paid for the year was $1,354m, which was 44% of Reported Profit Before Tax and 21% of Core Profit Before Tax. 

 

Both the underlying Reported and underlying Core tax rates for the year ended 31 December 2014 were around 18%. Taking into account the one-off benefits totalling $309m in respect of a transfer pricing matter, non-Core revaluations of contingent consideration arising on business combinations, and the benefit of the UK Patent Box, the Reported and Core tax rates fell to 1% and 16% respectively.

 

Earnings Per Share (EPS)

Core EPS in the year increased by 7% to $4.26.


Reported EPS was up by 137% at $2.23. Core profit adjustments were lower in the year and represented 40% of Core Operating Profit compared to 69% in 2014, mainly as a result of the fair value movements described above.

 

Dividends

The Board has declared a second interim dividend of $1.90 per share (131.0 pence, 16.26 SEK) bringing the dividend per share for the full year to $2.80 (188.5 pence, 23.97 SEK). The Board reaffirms its commitment to the Company's progressive dividend policy.

 

For holders of the Company's American Depositary Shares (ADSs), the $1.90 per Ordinary Share equates to $0.95 per ADS. Following the ratio change to the Company's NYSE-listed sponsored Level 2 American Depositary Receipt programme on 27 July 2015, two ADSs equal one Ordinary Share.

 

Productivity

Restructuring charges of $372m were recognised in the fourth quarter, bringing the full-year total to $1,034m, as the Company continued to make good progress in implementing its restructuring plans.

 

These charges included $683m related to the Phase 4 programme, initially announced in March 2013 and subsequently expanded. A $233m charge was associated with previously-announced site exits (including Avlon in the UK) and the integration of the Diabetes and Respiratory businesses acquired from BMS and Almirall respectively. A charge of $102m was associated with targeted restructuring of the Company's commercial business, implemented in late 2015, principally in Venezuela, in response to challenging economic conditions, and Europe.

 

Furthermore, as part of the ongoing commitment to improve productivity, the Company is initiating multi-year transformation programmes within back-office functions (principally finance and human resources) with anticipated costs by the end of 2018 of $270m. Once complete, these should deliver annualised benefits of approximately $100m by the end of 2018.

 

Final estimates for programme costs, benefits and headcount impacts in all functions will be subject to completion of the requisite consultation in the various areas. The Company's priority in undertaking these restructuring initiatives is to work with affected employees on the proposed changes, acting in accordance with relevant local consultation requirements and employment law.

 

Cash Flow and Balance Sheet

 

Cash Flow

The Company generated a cash inflow from operating activities of $3,324m in the year compared with $7,058m in the comparative period. Cash generated from operating activities reflects a modest increase in investment in working capital of $49m compared to a decline of $2,508m in 2014. Working capital improvements made in 2014 have been sustained, minimising the impact of increased acquired diabetes and launch product inventory balances.

 

Net cash outflows from investing activities were $4,239m compared with $7,032m in the prior year. This reflects cash payments relating to business acquisitions in FY 2014 of $4,461m, which primarily related to the BMS Diabetes alliance and Almirall acquisitions, being higher than those in FY 2015 of $3,025m, which primarily related to the ZS Pharma acquisition. In addition, there was a cash inflow from the disposal of intangible assets of $1,130m in FY 2015, principally related to the disposals of Entocort, Myalept and Caprelsa.

 

Debt and Capital Structure

At 31 December 2015, outstanding gross debt (interest-bearing loans and borrowings) was $15,053m (31 December 2014: $10,843m). In November 2015, the Company issued a total of $6bn of notes, with the proceeds of the issue to be used to fund corporate and business development activity, repay certain outstanding commercial paper obligations and for general corporate purposes. Of the gross debt outstanding at 31 December 2015, $916m was due within one year (31 December 2014: $2,446m). The Company's net debt position at 31 December 2015 was $7,762m (31 December 2014: $3,223m).

 

Shares in Issue

During the year, one million shares were issued in respect of share option exercises for a consideration of $43m. The total number of shares in issue as at 31 December 2015 was 1,264 million.

 

Capital Allocation

The Board's aim is to continue to strike a balance between the interests of the business, financial creditors and the Company's shareholders. After providing for investment in the business, supporting the progressive dividend policy and maintaining a strong, investment-grade credit rating, the Board will keep under review investment in earnings-accretive opportunities.

 

Sensitivity: Foreign-Exchange Rates

 

The Company provides the following currency sensitivity information:

 





Average Exchange Rates Versus USD




Impact Of 5% Weakening In Exchange Rate Versus USD ($m)2

Currency


Primary Relevance


FY

2015


YTD 20161


Change %


Total Revenue


Core Operating Profit

EUR


Product Sales


0.90


0.92


(2)


(178)


(103)

JPY


Product Sales


121.04


118.27


2


(102)


(66)

CNY


Product Sales


6.28


6.57


(4)


(133)


(62)

SEK


Costs


8.43


8.54


(1)


(8)


71

GBP


Costs


0.65


0.69


(6)


(34)


96

Other3










(201)


(122)














1Based on average daily spot rates between 1 January 2016 and 29 January 2016

2Based on 2015 actual results at 2015 actual exchange rates

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

 

Currency Hedging

 

AstraZeneca monitors the impact of adverse currency movements on a portfolio basis, recognising correlation effects. The Company may hedge to protect against adverse impacts on cash flow over the short to medium term. As at 31 December 2015, AstraZeneca had hedged around 85% of forecast short-term currency exposure that arises between the booking and settlement dates on non-local currency purchases and Product Sales.

 

Corporate and Business Development Update

___________________________________________________________________________

 

The highlights of the Company's corporate and business development activities since the prior results announcement on 5 November 2015 are shown below.

 

a) Investment in Acerta Pharma

On 17 December 2015, AstraZeneca announced that it had entered into an agreement to invest in a majority equity stake in Acerta Pharma B.V. (Acerta), a privately-owned biopharmaceutical company based in the Netherlands and the US. The transaction will provide AstraZeneca with a potentially best-in-class irreversible oral Bruton's tyrosine kinase (BTK) inhibitor, acalabrutinib (ACP-196), currently in Phase II/III development for B-cell blood cancers and in Phase I/II clinical trials in multiple solid tumours.

 

On 2 February 2016, on completion of the agreement, AstraZeneca acquired 55% of the entire issued share capital of Acerta for an upfront payment of $2.5bn. A further payment of $1.5bn will be paid either on receipt of the first regulatory approval for acalabrutinib in the US, or the end of 2018, whichever is sooner. The agreement also includes options, which if exercised, provide the opportunity for Acerta shareholders to sell, and AstraZeneca to buy, the remaining 45% of shares in Acerta (see Note 5).

 

b) Acquisition of ZS Pharma

On 6 November 2015, AstraZeneca announced that it had entered into an agreement to acquire ZS Pharma Inc. (ZS Pharma), a biopharmaceutical company based in San Mateo, California. The transaction, completed in Q4 2015, gives AstraZeneca access to the potassium-binding compound ZS-9. This is a potential best-in-class treatment for hyperkalaemia, a condition associated with increased mortality in chronic kidney disease (CKD) and chronic heart failure (CHF). Under the terms of the agreement, AstraZeneca acquired ZS Pharma for $90 per share (see Note 4).

 

c) Respiratory portfolio acquisition

On 16 December 2015, AstraZeneca announced that it had entered into a definitive agreement to acquire the core Respiratory business of Takeda Pharmaceutical Company Limited (Takeda). The transaction, once completed, will include the expansion of rights to roflumilast (marketed as Daliresp in the US and Daxas in other countries), the only approved oral PDE4 inhibitor for the treatment of COPD.

 

Under the terms of the agreement, AstraZeneca will make a payment of $575m. Upon completion approximately 200 staff will transfer to AstraZeneca.

 

d) Allergan - ATM-AVI

On 29 January 2016, it was announced that AstraZeneca had entered into a global agreement with Allergan plc (Allergan) to develop and commercialise ATM-AVI, an investigational, fixed-dose antibiotic, combining aztreonam and avibactam. Together, the two companies will evaluate the combination to treat serious infections caused by metallo βlactamase MBL-producing Gram-negative pathogens, a difficult-to-treat sub-type of carbapenem-resistant Enterobacteriaceae, for which there are currently very limited treatments. ATM-AVI may present a new treatment option for patients with MBL-producing pathogens.

 

Under the terms of the agreement, Allergan will maintain commercialisation rights in the US and Canada and AstraZeneca will retain commercialisation rights in all other countries. AstraZeneca initiated a Phase I trial for ATM-AVI in 2012.

 

e) Agreement on rights to Entocort in the US

On 15 December 2015, AstraZeneca completed an agreement with Perrigo Company plc (Perrigo) for the divestment of US rights to Entocort (budesonide), a gastroenterology medicine for patients with mild to moderate Crohn's disease. Under the terms of the agreement, Perrigo paid AstraZeneca $380m to acquire the rights to sell Entocort capsules and the authorised generic Entocort capsules marketed by Par Pharmaceuticals Companies, Inc.

 

The transaction did not include the transfer of any AstraZeneca employees or facilities. As a divestment, the income was recorded within Other Operating Income.

 

f) Strategic investments in China

On 16 December 2015, AstraZeneca announced a range of strategic initiatives to accelerate the delivery of innovative biologics and targeted medicines to patients in China. The initiatives and investments include a strategic alliance with WuXi AppTec, a leading Chinese biologics manufacturer and contract research organisation, to produce innovative biologics locally in China. Under the agreement, AstraZeneca has the option to acquire WuXi AppTec's biologics manufacturing capacity in Wuxi City in the next few years through an overall investment approximating $100m. Prior to that, WuXi AppTec remains the Company's exclusive partner for R&D manufacturing for innovative biologics in China.

 

Research and Development Update

________________________________________________________________________________

 

A comprehensive table with AstraZeneca's pipeline of medicines in human trials can be found later in this document.

 

Since the prior results announcement on 5 November 2015:

 

Regulatory Approvals

3

-     Zurampic (US)

-     Tagrisso (US, EU)

 

Regulatory Submission Acceptances

3

-     brodalumab (US, EU)

-     ZS-9 (EU)

 

Other Key Developments

3

-     CHMP positive recommendations (EU):                        Zurampic, Brilique, Tagrisso

New Molecular Entities (NMEs) in Pivotal Trials or under Regulatory Review*

15

RIA

-     PT003* - COPD

-     brodalumab*

-     benralizumab

-     tralokinumab - severe asthma

-     PT010 - COPD

-     anifrolumab - lupus (SLE)

 

CVMD

-     roxadustat

-     ZS-9*

 

Oncology

-     cediranib*

-     tremelimumab

-     durvalumab - multiple cancers

-     acalabrutinib

-     moxetumomab pasudotox - leukaemia

-     selumetinib

 

ING

-     CAZ AVI*

 

Projects in clinical pipeline

125


 

Key: RIA - Respiratory, Inflammation & Autoimmunity, CVMD - Cardiovascular & Metabolic Disease, ING - Infection, Neuroscience & Gastrointestinal

 

1.   Respiratory, Inflammation & Autoimmunity (RIA)

 

Steady progress continues to be made in the RIA pipeline, which now includes six programmes in pivotal trials or under registration. AstraZeneca's Respiratory portfolio includes a range of differentiated potential medicines such as novel combinations, biologics and devices for the treatment of asthma and COPD. The pipeline also includes a number of assets in inflammatory and autoimmune diseases within areas such as psoriasis, systemic lupus and rheumatoid arthritis.

 

a) Symbicort (asthma)

Symbicort comprises budesonide (a corticosteroid, ICS) and formoterol (a long-acting beta agonist, LABA). The FDA required all manufacturers of medicines indicated for the treatment of asthma, containing LABA-based medicines, to conduct identical trials evaluating the safety when used in combination with an inhaled corticosteroid compared to the ICS alone.

 

The Symbicort LABA safety trial met its primary endpoint in the period, based on top-line results, demonstrating that the risk of serious asthma-related events for Symbicort is no different to that of budesonide alone. The trial was a randomised, double-blind, 26-week, active-controlled trial in 11,700 patients, aged at least 12 years of age and suffering from asthma.

 

b) Zurampic (gout)

On 22 December 2015, AstraZeneca announced that the FDA had approved Zurampic (lesinurad) 200mg tablets in combination with a xanthine oxidase inhibitor (XOI) for the treatment of hyperuricemia associated with gout in patients who have not achieved target serum uric-acid levels with an XOI alone. The approval was based on data from three pivotal Phase III trials, CLEAR1, CLEAR2 and CRYSTAL. These represent the largest clinical trial data set of gout patients (n=1,537) treated with combination urate-lowering therapy.

 

On 18 December 2015, AstraZeneca announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion recommending the marketing authorisation of Zurampic 200mg tablets. Zurampic is recommended for the adjunctive treatment of hyperuricaemia in adult gout. Zurampic will now be reviewed by the European Commission (EC). AstraZeneca anticipates a final decision in the first half of 2016.

 

c) Brodalumab (psoriasis)

During the period, regulatory submissions for brodalumab for the treatment of moderate-to-severe psoriasis were accepted in the US and EU. The submissions were supported by data from the three AMAGINE Phase III pivotal trials. The results indicated that brodalumab has an effective mechanism of action that delivers clinical benefit and could help a significant number of moderate-to-severe plaque psoriasis patients achieve total clearance of skin disease.

 

Under a collaboration agreement, Valeant Pharmaceuticals International Inc. (Valeant) has an exclusive license to develop and commercialise brodalumab globally, except in Japan and certain other Asian countries. Valeant assumes decisions on future development and development costs associated with the regulatory approval of brodalumab, as well as decisions on future development.

 

d) Tralokinumab (IPF)

A Phase II trial for tralokinumab in idiopathic pulmonary fibrosis (IPF), a potential exploratory indication for the medicine, was terminated in the period due to lack of efficacy on endpoints of IPF progression. No safety issues were detected. The Phase III programme for severe asthma, the lead indication for tralokinumab, is ongoing, with top-line results expected in 2017. Tralokinumab is anticipated to become AstraZeneca's second biologic medicine in Respiratory diseases after benralizumab.

 

e) Anifrolumab (lupus)

Positive new data on anifrolumab in systemic lupus erythematosus (SLE) were presented at the American College of Rheumatology's annual scientific meeting in San Francisco. The trial met primary and secondary endpoints in Phase II, with anifrolumab significantly reducing lupus disease activity compared with placebo across multiple endpoints.

 

In line with the Company's dedication to personalised medicines, anifrolumab is being developed with an interferon-gene signature test designed to identify patients who may be more likely to benefit from treatment. The anifrolumab Phase III programme in SLE was initiated in July 2015 and is expected to read out with top-line results in 2018. Additional ongoing trials include a Phase II lupus nephritis trial and a Phase I trial with a subcutaneous route of administration.

 

2.   Cardiovascular & Metabolic Disease (CVMD)

 

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

 

a) Brilinta/Brilique (CV disease)

On 18 December 2015, AstraZeneca announced that the CHMP adopted a positive opinion, recommending approval of the 60mg dose of Brilique for the treatment of patients with a history of heart attack and at high risk of having a further coronary event. The opinion stated that treatment may be started as continuation therapy after an initial one-year treatment with dual anti-platelet therapy. The 90mg dose of Brilique is currently indicated in the EU to reduce the rate of cardiovascular death, myocardial infarction (MI, also known as heart attack) and stroke in patients with acute coronary syndrome.

 

b) Saxagliptin/dapagliflozin (type-2 diabetes)

AstraZeneca has continued to work closely with the FDA following the receipt of a Complete Response Letter in October 2015. The Company plans to submit additional clinical data for saxagliptin/dapagliflozin from a trial that is now completed and anticipates a new regulatory submission in the first half of 2016.

 

c) ZS-9 (hyperkalaemia)

The acquisition of ZS Pharma was completed on 17 December 2015 and ZS-9 (sodium zirconium cyclosilicate), a potential best-in-class treatment for hyperkaelemia, was accepted in the period by CHMP for regulatory review, in line with the Company's expectations.

 

3.   Oncology

 

AstraZeneca has a deep-rooted heritage in Oncology with a rejuvenating portfolio of medicines that has the potential to transform patients' lives and the Company's future. With at least six new medicines molecular entities to be launched between 2014 and 2020 and a broad pipeline of small molecules and biologics in development, the Company is committed to advance Oncology as one of AstraZeneca's six Growth Platforms, focusing on lung, ovarian, breast and blood cancers. By exploiting the power of four scientific platforms -- immuno-oncology (IO), the genetic drivers of cancer and resistance, DNA damage repair and antibody drug conjugates -- and by championing the development of personalised medicines combinations, AstraZeneca has the vision to redefine cancer treatment and, one day, eliminate cancer as a cause of death.

 

a) Faslodex (breast cancer)

On 29 January 2016, the Company received notification that the FDA had accepted for regulatory submission a supplemental new drug application (sNDA) for Faslodex. The aim of the sNDA is to supplement the currently-approved indication for Faslodex to encompass the positive results of the Phase III PALOMA-3 trial. This trial tested adding Ibrance (palbociclib) to Faslodex versus Faslodex alone in women with HR-positive, HER2-negative metastatic breast cancer. The trial was conducted by Pfizer Inc., in collaboration with AstraZeneca.

 

b) Lynparza (ovarian and other cancers)

In January 2016 Breakthrough Therapy designation was granted by the FDA for Lynparza for prostate cancer patients with BRCA1/2 or ATM gene-mutated metastatic castrate-resistant prostate cancer (mCRPC) who have received previous taxane-based chemotherapy and one newer hormonal agent (abiraterone or enzalutamide). Accompanying this designation, Lynparza received a positive Phase III investment decision in the period from the Company for development in mCRPC.

 

These developments highlighted Lynparza's significant future potential, in addition to the approved use in treating patients with a particular form of ovarian cancer.

 

c) Tagrisso (lung cancer)

On 13 November 2015, Tagrisso was approved by the FDA for patients with epidermal growth factor receptor (EGFR) T790M mutation-positive metastatic non-small cell lung cancer (NSCLC) who have progressed on an EGFR tyrosine kinase inhibitor (TKI). This followed one of the fastest medicine-development programmes in history, from the start of clinical trials to approval in two years and eight months. Tagrisso provides an important new option for patients, with an objective response rate of 59% and a median duration of response of over one year.

 

On 3 February 2016, Tagrisso received conditional approval in the EU for the treatment of adult patients with locally-advanced or metastatic EGFR T790M mutation-positive NSCLC. Tagrisso is the first T790M-directed inhibitor to receive marketing authorisation by the EU. Tagrisso's indication includes patients with T790M NSCLC regardless of previous treatment with an EGFR TKI, underlining the unmet medical need in the small number of EGFR-mutated NSCLC patients who are initially (de novo) diagnosed with the T790M mutation. The approval follows the positive opinion received on 18 December 2015.

 

Interactions with regulatory authorities in the rest of the world, including the accelerated review process in Japan, are ongoing.

 

The ADAURA Phase III trial in adjuvant EGFRm NSCLC began enrollment in the quarter and will measure disease-free survival.

 

d) Durvalumab (multiple cancers)

Monotherapy
As announced on 18 December 2015, the preliminary findings of the ATLANTIC trial supported the clinical activity of durvalumab. In the trial of 3rd-line or later-stage NSCLC patients, durvalumab demonstrated expected clinical activity and durable response in heavily pre-treated patients. The treatment and regulatory landscape in lung cancer is evolving however, and the Company does not anticipate any regulatory submission as a monotherapy for 3rd-line PD-L1-positive NSCLC patients. Durvalumab is a cornerstone of the IO portfolio, with a fast-advancing development programme focused primarily on novel combinations.

 

Combination therapy

New data from the Phase Ib durvalumab + tremelimumab (durva + treme) combination trial in NSCLC were presented at the Society for Immunotherapy of Cancer meeting in November 2015. The trial investigators presented updated safety and efficacy results for 102 patients. In 84 of the patients evaluable for efficacy, results showed an overall response rate of 25% (21/84, 95% CI of 16-36%), consistent with data presented at the American Society of Clinical Oncology's meeting in 2015. Response rates did not appear dependent on PD-L1 status: 35% (PD-L1-positive), 22% (PD-L1-negative, <25% tumour-cell staining) and 33% (PD-L1-negative, 0% tumour-cell staining). Higher response rates were observed in those patients who had only received one prior treatment: 47% (15/32, 95% CI of 29-65%).

 

The CAURAL trial, combining Tagrisso and durvalumab, remains on clinical hold, based on an increase in the incidence of interstitial lung disease, compared to what has been previously reported with each medicine used on its own. Investigation of the safety signal is ongoing.

 

During the period, first patients were dosed in a number of durva + treme combination trials, including NEPTUNE, EAGLE, KESTREL, DANUBE and ALPS as well as in the safety lead-in of the triple combination trial in NSCLC with chemotherapy. AstraZeneca is planning a Phase III trial with durvalumab in small cell lung cancer that will include the first IO-IO-chemotherapy triple-combination arm. A second, earlier-stage trial will also pair durvalumab with other portfolio medicines such as Lynparza and AZD1775 (WEE-1).

 

The MYSTIC trial saw its primary endpoint updated to a co-primary endpoint of progression-free survival (PFS) and overall survival. The trial is recruiting ahead of expectations and is expected to be the first IO-IO combination 1st-line NSCLC trial to provide PFS data, in the first half of 2017.

 

An update on ongoing trials with durvalumab is provided over the page:

 

LUNG CANCER

Name

Phase

Line of treatment

Population

Design

Timelines

Status

Early disease

 

Monotherapy

ADJUVANT1

III

N/A

Stage Ib-IIIa NSCLC

durvalumab vs placebo

FPD Q1 2015

 

Data expected 2020

Recruiting

PACIFIC

III

N/A

Stage III unresectable NSCLC

durvalumab vs placebo

FPD Q2 2014

 

Data expected 2017

Recruiting; >50% of patients now randomised

Advanced/metastatic disease

 

Combination therapy

ARCTIC

III

3rd line

PD-L1 neg. NSCLC

durvalumab vs tremelimumab vs durva + treme vs SoC

FPD Q2 2015

 

Data expected H1 2017

Recruiting

MYSTIC

III

1st line

NSCLC

durvalumab vs durva + treme vs SoC

FPD Q3 2015

 

Data expected H1 2017

Recruiting

NEPTUNE

III

1st line

NSCLC

durva + treme vs SoC

FPD Q4 2015

 

Data expected 2018

First patient now dosed

 

-

III

1st line

NSCLC

durvalumab + chemotherapy +/- tremelimumab

-

First patient now dosed in safety lead-in

-

III

1st line

SCLC

durva + treme + chemotherapy vs SoC

-

Awaiting first patient dosed

1 Conducted by the National Cancer Institute of Canada

 

METASTATIC OR RECURRENT HEAD AND NECK CANCER

Name

Phase

Line of treatment

Population

Design

Timelines

Status

Monotherapy

HAWK

II

2nd line

PD-L1 pos. SCCHN

durvalumab (single arm)

FPD Q1 2015

 

Data expected

H2 2016

Recruiting

 

Indication granted FDA Fast Track designation

Combination therapy

CONDOR

II

2nd line

PD-L1 neg. SCCHN

durvalumab vs tremelimumab vs durva + treme

FPD Q2 2015

 

Data expected 2017

Recruiting

EAGLE

III

2nd line

SCCHN

durvalumab vs durva + treme vs SoC

FPD Q4 2015

 

Data expected 2018

First patient now dosed

KESTREL

 

III

1st line

SCCHN

durvalumab vs durva + treme vs SoC

FPD Q4 2015

 

Data expected 2018

First patient now dosed

OTHER METASTATIC CANCERs

Name

Phase

Line of treatment

Population

Design

Timelines

Status

DANUBE

III

1st line

Cisplatin chemo-

therapy- eligible/

ineligible bladder cancer

durvalumab vs durva + treme vs SoC

FPD Q4 2015

 

 

Data expected 2018

First patient now dosed

ALPS

II

2nd line

Metastatic pancreatic cancer

durva + treme (single arm)

FPD Q4 2015

 

Data expected 2017

First patient now dosed

-

II

2nd/3rd line

Metastatic gastric cancer

durvalumab vs tremelimumab vs durva + treme

-

In preparation

-

II

2nd line

Unresectable liver cancer

durvalumab vs tremelimumab vs durva + treme

-

In preparation

 

FPD=First Patient Dosed, LPD=Last Patient Dosed, SoC=Standard of Care, SCCHN = Squamous Cell Carcinoma of the Head and Neck

 

e) Early-stage Oncology

New Oncology programmes that progressed into human trials during the period included MEDI9197, a TLR 7/8 agonist, in solid tumours and a GITR fusion protein, MEDI1873. Furthermore, two small-molecule programmes developed in collaboration with BIND Therapeutics moved into clinical trials: AZD0156, a first-in-class ATM kinase inhibitor which further strengthens the Company's leading position in DNA damage response and AZD2811, a nanoparticle formulation of a novel, selective inhibitor of Aurora B kinase that has been shown to be active in both solid and haematological tumours.

 

Additionally the Company now has a HER2-targeted, bi-specific antibody drug conjugate, MEDI4276, in a Phase I trial in solid tumours. HER2 (receptor tyrosine-protein kinase) is over-expressed in several cancers, including breast and gastric cancers. AZD3759, an EGFR inhibitor designed to cross the blood brain barrier, progressed into Phase II expansion cohorts in leptomeningeal disease, a form of brain cancer, and in patients with brain metastases.

 

ASTRAZENECA DEVELOPMENT PIPELINE 31 DECEMBER 2015

Includes AstraZeneca-sponsored or directed studies only

Phase III / Pivotal Phase II / Registration

NMEs and significant additional indications

Regulatory submission dates shown for assets in Phase III and beyond. As disclosure of compound information is balanced by the business need to maintain confidentiality, information in relation to some compounds listed here has not been disclosed at this time.

†    US and EU dates correspond to anticipated acceptance of the regulatory submission.

#    Partnered and/or in collaboration.

 

Compound

Mechanism

Area Under Investigation

Date Commenced Phase

Estimated Regulatory Submission / Submission Acceptance†

US

EU

Japan

China

Respiratory, Inflammation and Autoimmunity

anifrolumab# TULIP

IFN-alphaR mAb

systemic lupus erythematosus

Q3 2015

2019

(Fast Track)

2019

2019


benralizumab#

CALIMA SIROCCO ZONDA BISE BORA

GREGALE

IL-5R mAb

severe asthma

Q4 2013

H2 2016

H2 2016

N/A

N/A

benralizumab#

TERRANOVA GALATHEA

IL-5R mAb

COPD

Q3 2014

2018

2018

N/A

N/A

brodalumab#
AMAGINE-1,2,3

IL-17R mAb

psoriasis

Q3 2012

Accepted1

Accepted

N/A

N/A

Zurampic (lesinurad)
CLEAR 1,2
CRYSTAL

selective uric acid reabsorption inhibitor (URAT-1)

chronic treatment of hyperuricemia in patients with gout

Q4 2011

Approved

Accepted2



PT003 GFF PINNACLE

LABA/LAMA

COPD

Q2 2013

Accepted

H2 2016

2017

2017

PT010

LABA/LAMA/ ICS

COPD

Q3 2015

2018

2018

2017

2019

tralokinumab

STRATOS 1,2

TROPOS

MESOS

IL-13 mAb

severe asthma

Q3 2014

2018

2018

2018


Cardiovascular and Metabolic Diseases

Brilinta/Brilique3

P2Y12 receptor antagonist

arterial thrombosis


Launched

Launched

Accepted

Launched

Epanova#

omega-3 carboxylic acids

severe hypertrigly-ceridemia


Approved


2018

2019

Farxiga/Forxiga4

SGLT2 inhibitor

type-2 diabetes


Launched

Launched

Launched

Accepted

roxadustat# OLYMPUS ROCKIES

hypoxia-inducible factor prolyl hydroxylase inhibitor

anaemia in CKD/ESRD

Q3 2014

2018

N/A

N/A

H2 20165

ZS-9 (sodium zirconium cyclosilicate)

 

potassium binder

hyperkalaemia


Accepted

Accepted



Oncology

acalabrutinib#6

Bruton's tyrosine kinase (BTK) inhibitor

B-cell blood cancers


H2 2016




cediranib

ICON 6

VEGFR tyrosine kinase inhibitor

PSR ovarian cancer

Q2 2007


Accepted (Orphan Drug)



durvalumab# + tremelimumab

ALPS

PD-L1 mAb + CTLA-4 mAb

metastatic pancreatic ductal carcinoma

Q4 2015

2017

2017

2017


durvalumab#
PACIFIC

PD-L1 mAb

stage III NSCLC

Q2 2014

2017

2020

2020


durvalumab#
HAWK

PD-L1 mAb

2nd-line SCCHN (PD-L1 positive)

Q1 2015

 

2017

(Fast Track)

2019

2019


durvalumab# +

tremelimumab
ARCTIC

PD-L1 mAb + CTLA-4 mAb

3rd-line NSCLC

Q2 2015

2017

2017

2017


durvalumab# + tremelimumab
CONDOR

PD-L1 mAb + CTLA-4 mAb

2nd-line SCCHN (PD-L1 negative)

Q2 2015

2017

2019

2019


durvalumab# + tremelimumab

DANUBE

PD-L1 mAb + CTLA-4 mAb

1st-line bladder

Q4 2015

2018

 

2018

2018


durvalumab# + tremelimumab
EAGLE

PD-L1 mAb + CTLA-4 mAb

2nd-line SCCHN

Q4 2015

2019

2019

2019


durvalumab# + tremelimumab
KESTREL

PD-L1 mAb + CTLA-4 mAb

1st-line SCCHN

Q4 2015

2018

2018

2018


durvalumab# + tremelimumab

MYSTIC

PD-L1 mAb + CTLA-4 mAb

1st-line NSCLC

Q3 2015

2017

2017

2017


durvalumab# + tremelimumab

NEPTUNE

PD-L1 mAb + CTLA-4 mAb

1st-line NSCLC

Q4 2015

2019

2019

2019


moxetumomab pasudotox#

PLAIT

anti-CD22 recombinant
immunotoxin

hairy cell leukaemia

Q2 2013

2017

(Orphan Drug)

2018



selumetinib#
ASTRA

MEK inhibitor

differentiated thyroid cancer

Q3 2013

2018

2018



selumetinib#
SELECT-1

MEK inhibitor

2nd-line KRASm NSCLC

Q4 2013

2017

2017



Tagrisso (AZD9291)

AURA, AURA 2

EGFR tyrosine kinase inhibitor

≥2nd-line advanced EGFRm T790M NSCLC

 

Q2 2014

Launched

(Breakthrough designation, Priority Review, Orphan Drug)

Approved7 (Accelerated assessment)

Accepted (Priority Review)

2017

Tagrisso (AZD9291)

AURA 3

EGFR tyrosine kinase inhibitor

≥2nd-line advanced EGFRm T790M NSCLC

 

Q3 2014

2017

 

2017

2017


tremelimumab DETERMINE

 

CTLA-4 mAb

mesothelioma

Q2 2014

H2 2016

(Orphan Drug, Fast Track)

H2 2016

H2 2016


Infection, Neuroscience and Gastrointestinal

CAZ AVI#

 

cephalosporin/

beta lactamase inhibitor

serious infections, complicated intra-abdominal infection, complicated urinary tract infection

Q1 2012

N/A

Accepted


2017

CAZ AVI#

cephalosporin/ beta lactamase inhibitor

hospital-acquired pneumonia/ ventilator-associated pneumonia

Q2 2013

N/A

Accepted

 

2017

MEDI-550

pandemic influenza virus vaccine

pandemic influenza prophylaxis


N/A

H1 20168

N/A

N/A

Zinforo#

extended spectrum cephalosporin with affinity to penicillin-binding proteins

pneumonia/skin infections


N/A

Launched

N/A

Submitted

¶    Registrational Phase II/III trial.

1    US regulatory submission accepted Q1 2016.

2    CHMP Positive Opinion received December 2015.

3    Brilinta in the US; Brilique in rest of world.

4    Farxiga in the US; Forxiga in rest of world.

5    Rolling NDA submission to be initiated in H2 2016.

6    Completion of the agreement with Acerta Pharma Q1 2016

7    CHMP Positive Opinion received December 2015. Approval received Q1 2016.

8    MAA submitted December 2015. Regulatory acceptance anticipated H1 2016.

 

Phases I and II

NMEs and significant additional indications

Compound

Mechanism

Area Under Investigation

Phase

Date Commenced Phase

Respiratory, Inflammation and Autoimmunity

 

abediterol (AZD0548)

LABA

asthma/COPD

II

Q4 2007

 

anifrolumab#

IFN-alphaR mAb

lupus nephritis

II

Q4 2015

 

AZD7594

inhaled SGRM

asthma/COPD

II

Q3 2015

 

AZD7624

inhaled P38 inhibitor

COPD

II

Q4 2014

 

AZD9412#

inhaled interferon beta

asthma/COPD

II

Q3 2015

 

mavrilimumab#

GM-CSFR mAb

rheumatoid arthritis

II

Q1 2010

 

MEDI-551#

CD19 mAb

neuromyelitis optica1

II

Q1 2015

 

MEDI2070#

IL-23 mAb

Crohn's disease

II

Q1 2013

 

abrilumab#

alpha(4)beta(7) mAb

Crohn's disease / ulcerative colitis

II

Q4 2012

 

MEDI9929#

TSLP mAb

asthma / atopic dermatitis

II

Q2 2014

 

PT010

LABA/LAMA/ICS

asthma

II

Q2 2014

 

RDEA3170

selective uric acid reabsorption inhibitor (URAT-1)

chronic treatment of hyperuricemia in patients with gout

II

Q3 2013

 

tralokinumab

IL-13 mAb

atopic dermatitis

II

Q1 2015

 

anifrolumab#

IFN-alphaR mAb

systemic lupus erythematosus (subcutaneous)

I

Q4 2015

 

lesinurad+allopurinol

selective uric acid reabsorption inhibitor (URAT-1)+xanthine oxidase inhibitor

chronic treatment of hyperuricemia in patients with gout

I

Q4 2015

 

AZD1419#

TLR9 agonist

Asthma

I

Q3 2013

 

AZD7986

DPP1

COPD

I

Q4 2014

 

AZD8871

MABA

COPD

I

Q4 2015

 

AZD8999

MABA

COPD

I

Q4 2013

 

AZD9567

oral SGRM

rheumatoid arthritis

I

Q4 2015

 

MEDI4920

anti-CD40L-Tn3 fusion protein

primary Sjögren's syndrome

I

Q2 2014

 

MEDI5872#

B7RP1 mAb

systemic lupus erythematosus

I

Q4 2008

 

MEDI7836

IL-13 mAb-YTE

Asthma

I

Q1 2015

 

Cardiovascular and Metabolic Diseases

 

AZD4076

anti-miR103/107 oligonucleotide

non-alcoholic fatty liver disease/non-alcoholic steatohepatitis (NASH)

I

Q4 2015

 

MEDI6012

LCAT

ACS

II

Q4 2015

 

MEDI0382

GLP-1/

glucagon dual agonist

diabetes / obesity

I

Q1 2015

 

MEDI4166

PCSK9/GLP-1 mAb + peptide fusion

diabetes / cardiovascular

I

Q4 2015

 

MEDI8111

Rh-factor II

trauma / bleeding

I

Q1 2014

 

Oncology

 

AZD1775#

WEE-1 inhibitor

ovarian cancer

II

Q4 2012

 

AZD2014

mTOR serine/ threonine kinase inhibitor

solid tumours

II

Q1 2013

 

AZD3759 BLOOM

EGFR tyrosine kinase inhibitor

brain metastases in advanced EGFRm NSCLC

II

Q4 2015

 

Tagrisso (AZD9291)

BLOOM

EGFR tyrosine kinase inhibitor

 

AZD4547

FGFR tyrosine kinase inhibitor

solid tumours

II

Q4 2011

 

AZD5069+durvalumab#

CXCR2 + PD-L1 mAb

SCCHN

II

Q3 2015

 

AZD9150#+durvalumab#

STAT3 inhibitor + PD-L1 mAb

 

AZD5363#

AKT kinase inhibitor

breast cancer

II

Q1 2014

 

durvalumab#

PD-L1 mAb

solid tumours

II

Q3 2014

 

durvalumab# + tremelimumab

PD-L1 mAb + CTLA-4 mAb

gastric cancer

II

Q2 2015

 

MEDI-551#

CD19 mAb

diffuse B-cell lymphoma

II

Q1 2012

 

MEDI-573#

IGF mAb

metastatic breast cancer

II

Q2 2012

 

savolitinib/

volitinib#

MET tyrosine kinase inhibitor

papillary renal cell carcinoma

II

Q2 2014

 

selumetinib#

MEK inhibitor

2nd-line KRAS wt NSCLC

II

Q1 2013

 

AZD0156

ATM serine/threonine kinase inhibitor

solid tumours

I

Q4 2015

 

AZD2811

Aurora B kinase inhibitor

solid tumours

I

Q4 2015

 

AZD5312#

androgen receptor inhibitor

solid tumours

I

Q2 2014

 

AZD6738

ATR serine/threonine kinase inhibitor

solid tumours

I

Q4 2013

 

AZD8186

PI3 kinase beta inhibitor

solid tumours

I

Q2 2013

 

AZD8835

PI3 kinase alpha inhibitor

solid tumours

I

Q4 2014

 

AZD9150#

STAT3 inhibitor

haematological malignancies

I

Q1 2012

 

Tagrisso (AZD9291) + (durvalumab# or selumetinib# or savolitinib#)

TATTON

EGFR tyrosine kinase inhibitor + (PD-L1 mAb or MEK inhibitor or MET tyrosine kinase inhibitor)

advanced EGFRm NSCLC

I

Q3 2014

 

AZD9496

selective oestrogen receptor downregulator (SERD)

ER+ breast cancer

I

Q4 2014

 

durvalumab#

PD-L1 mAb

solid tumours

I

Q3 2014

 

durvalumab# + MEDI0680

PD-L1 mAb + PD-1 mAb

solid tumours

I

Q2 2014

 

durvalumab# + MEDI6383#

OX40 agonist + PD-L1 mAb

solid tumours

I

Q2 2015

 

durvalumab# + dabrafenib + trametinib2

PD-L1 mAb+ BRAF inhibitor + MEK inhibitor

melanoma

I

Q1 2014

 

durvalumab# + tremelimumab

PD-L1 mAb + CTLA-4 mAb

solid tumours

I

Q4 2013

 

Iressa + durvalumab#

PD-L1 mAb+ EGFR tyrosine kinase inhibitor

NSCLC

I

Q2 2014

 

MEDI0562#

humanised OX40 agonist

solid tumours

I

Q1 2015

 

MEDI-551# + rituximab

CD19 mAb + CD20 mAb

haematological malignancies

I

Q2 2014

 

MEDI-565#

CEA BiTE mAb

solid tumours

I

Q1 2011

 

MEDI0639#

DLL-4 mAb

solid tumours

I

Q2 2012

 

MEDI0680

PD-1 mAb

solid tumours

I

Q4 2013

 

MEDI1873

GITR agonist fusion protein

solid tumours

I

Q4 2015

 

MEDI3617#

ANG-2 mAb

solid tumours

I

Q4 2010

 

MEDI4276

HER2 bispecific ADC mAb

solid tumours

I

Q4 2015

 

MEDI6383#

OX40 agonist

solid tumours

I

Q3 2014

 

MEDI9197#

TLR 7/8 agonist

solid tumours

I

Q4 2015

MEDI9447

CD73 mAb

solid tumours

I

Q3 2015

Infection, Neuroscience and Gastrointestinal

 

AZD3241

myeloperoxidase inhibitor

multiple system atrophy

II

Q2 2015

(Orphan Drug)

 

AZD3293#

beta-secretase inhibitor

Alzheimer's disease

II

Q4 2014

 

CXL#

beta lactamase inhibitor / cephalosporin

methicillin-resistant S. aureus

II

Q4 2010

 

MEDI7510

RSV sF+GLA-SE

prevention of RSV disease in older adults

II

Q3 2015

 

MEDI8852

influenza A mAb

influenza A treatment

II

Q4 2015

 

MEDI8897#

RSV mAb-YTE

passive RSV prophylaxis

II

Q1 2015

(FDA Fast Track)

 

MEDI4893

mAb binding to S. aureus toxin

hospital-acquired pneumonia / serious S. aureus infection

II

Q4 2014

(FDA Fast Track)

 

ATM AVI#

monobactam/ beta lactamase inhibitor

targeted serious bacterial infections

I

Q4 2012

 

AZD8108

NMDA antagonist

suicidal ideation

I

Q4 2014

 

MEDI1814

amyloid beta mAb

Alzheimer's disease

I

Q2 2014

 

MEDI3902

anti-Psl/PcrV

prevention of nosocomial pseudomonas pneumonia

I

Q3 2014

(FDA Fast Track)

 

 

1    Neuromyelitis optica: Now lead indication. Multiple sclerosis trial completed in 2015.

2    MedImmune-sponsored trial in collaboration with Novartis AG.

 

Significant Life-Cycle Management

Compound

Mechanism

Area Under Investigation

Date Commenced Phase

Estimated Regulatory Submission Acceptance

US

EU

Japan

China

Respiratory, Inflammation and Autoimmunity

Duaklir Genuair#

LAMA/LABA

COPD


2018

Launched

2018

2018

Symbicort

SYGMA

ICS/LABA

as-needed use in mild asthma

Q4 2014

N/A

2018


2019

Symbicort

ICS/LABA

breath actuated Inhaler asthma/COPD


2018




Cardiovascular and Metabolic Diseases

Brilinta/Brilique1 EUCLID

P2Y12 receptor antagonist

outcomes trial in patients with peripheral artery disease

Q4 2012

2017

2017

2017

2018

Brilinta/Brilique1 HESTIA

P2Y12 receptor antagonist

prevention of vaso-occlusive crises in paediatric patients with sickle cell disease

Q4 2014

2020

2020



Brilinta/Brilique1
PEGASUS-
TIMI 54

P2Y12 receptor antagonist

outcomes trial in patients with prior myocardial infarction

Q4 2010

Launched

(Priority Review)

Accepted2

Accepted

H2 2016

Brilinta/Brilique1 SOCRATES

P2Y12 receptor antagonist

outcomes trial in patients with stroke or TIA

Q1 2014

H1 2016

H1 2016

H2 2016

2017

Brilinta/Brilique1 THEMIS

P2Y12 receptor antagonist

outcomes trial in patients with type-2 diabetes and CAD, but without a previous history of MI or stroke

Q1 2014

2018

2018

2018

2019

Bydureon EXSCEL

GLP-1 receptor agonist

type-2 diabetes outcomes trial

Q2 2010

2018

2018

2018


Bydureon weekly
suspension

GLP-1 receptor agonist

type-2 diabetes

Q1 2013

2017

2017



Epanova

STRENGTH

omega-3 carboxylic acids

outcomes trial in statin-treated patients at high CV risk, with persistent hypertriglyceridemia plus low HDL-cholesterol

Q4 2014

2020

2020

2020

2020

Epanova/

Farxiga/Forxiga3

 

omega-3 carboxylic acids/ SGLT2 inhibitor

non-alcoholic fatty liver disease/non-alcoholic steatohepatitis (NASH)

Q1 2015





Farxiga/Forxiga3
DECLARE-
TIMI 58

SGLT2 inhibitor

type-2 diabetes outcomes trial

Q2 2013

2020

2020



Farxiga/Forxiga3

SGLT2 inhibitor

type-1 diabetes

Q4 2014

2018

2017

2018


Kombiglyze XR/Komboglyze4

DPP-4 inhibitor/ metformin FDC

type-2 diabetes


Launched

Launched


Submitted

Onglyza SAVOR-TIMI 53

DPP-4 inhibitor

type-2 diabetes outcomes trial

Q2 2010

Accepted

Launched


H2 20165

saxagliptin/

dapagliflozin FDC

DPP-4 inhibitor/ SGLT2 inhibitor FDC

type-2 diabetes

Q2 2012

Accepted6

Accepted



Xigduo XR/

Xigduo7

SGLT2 inhibitor/ metformin FDC

type-2 diabetes


Launched

Launched



Oncology

Faslodex

FALCON

oestrogen receptor antagonist

1st-line hormone receptor +ve advanced breast cancer

Q4 2012

H2 2016

H2 2016

H2 2016

2020

Lynparza (olaparib) SOLO-1

PARP inhibitor

1st-line BRCAm ovarian cancer

Q3 2013

2017

2017

2017


Lynparza (olaparib) SOLO-2

PARP inhibitor

2nd-line or greater BRCAm PSR ovarian cancer, maintenance monotherapy

Q3 2013

H2 2016

2017

2017


Lynparza (olaparib) SOLO-3

PARP inhibitor

gBRCA PSR ovarian cancer

Q1 2015

2018




Lynparza (olaparib) GOLD

PARP inhibitor

2nd-line gastric cancer

Q3 2013



2017


Lynparza (olaparib)

OlympiA

PARP inhibitor

gBRCA adjuvant breast cancer

Q2 2014

2020

2020

2020


Lynparza (olaparib) OlympiAD

PARP inhibitor

gBRCA metastatic breast cancer

Q2 2014

H2 2016

2017

2017


Lynparza (olaparib) POLO

PARP inhibitor

pancreatic cancer

Q1 2015

2018

2018

2018


Lynparza (olaparib)

PARP inhibitor

prostate cancer

Q3 2014

 

(Breakthrough Therapy Designation)8




Tagrisso (AZD9291)

ADAURA

EGFR tyrosine kinase inhibitor

adjuvant EGFRm NSCLC

Q4 2015

2022

2022



Tagrisso (AZD9291)

FLAURA

EGFR tyrosine kinase inhibitor

1st-line advanced EGFRm NSCLC

Q1 2015

2017

2017

2017

2020

Tagrisso (AZD9291) +dur-valumab#

CAURAL9

EGFR tyrosine kinase inhibitor + PD-L1 mAb

≥2nd-line advanced EGFRm T790M NSCLC

Q3 2015





Infection, Neuroscience and Gastrointestinal

Diprivan#

sedative and anaesthetic

conscious sedation


N/A

Launched

Accepted

Launched

linaclotide#

GC-C receptor peptide agonist

irritable bowel syndrome with constipation
(IBS-C)


N/A

N/A

N/A

Accepted10

Nexium

proton pump inhibitor

stress ulcer prophylaxis





H2 2016

Nexium

proton pump inhibitor

paediatrics


Launched

Launched

H2 2016

Accepted

 

1    Brilinta in the US; Brilique in rest of world.

2    CHMP Positive Opinion received December 2015.

3    Farxiga in the US; Forxiga in rest of world.

4    Kombiglyze XR in the US; Komboglyze in the EU.

5    Timing of China submission dependent on US regulatory approval.

6    Complete Response Letter received October 2015.

7    Xigduo XR in the US; Xigduo in the EU.

8    Breakthrough Therapy designation granted for prostate cancer patients with BRCA1/2 or ATM gene mutated mCRPC who have received previous taxane-based chemotherapy and one newer hormonal agent (abiraterone or enzalutamide).

9    Temporarily closed to enrolment.

10  Submission accepted January 2016.

 

Terminations (discontinued projects between 1 October and 31 December 2015)

 

NME / Line Extension

Compound

Reason for Discontinuation

Area Under Investigation

NME

AZD5847

Safety / efficacy

tuberculosis

NME

AZD9977

Safety / efficacy

diabetic kidney disease

NME

durvalumab#
ATLANTIC

Strategic

3rd-line NSCLC (PD-L1 positive)

LCM

durvalumab# after Tagrisso (AZD9291) or Iressa or selumetinib# +docetaxel or tremelimumab

Strategic

NSCLC

LCM

tralokinumab

Safety / efficacy

idiopathic pulmonary fibrosis

 

Completed Projects / Divestitures

 

Compound

Mechanism

Area Under Investigation

Completed/

Divested

Estimated Regulatory Submission Acceptance

US

EU

Japan

China

AZD49011

NK3 receptor antagonist

polycystic ovarian syndrome

Divested in Phase II





 

1    Divested to Millendo Therapeutics, Inc. Agreement announced January 2016.

 

Condensed Consolidated Statement of Comprehensive Income

For the year ended 31 December


2015 

$m 


Restated

2014*

$m 

Product sales


23,641 


26,095 

Externalisation revenue


1,067 


452 

Total revenue


24,708 


26,547 

Cost of sales


(4,646)


(5,842)

Gross profit


20,062 


20,705 

Distribution costs


(339)


(324)

Research and development expense


(5,997)


(5,579)

Selling, general and administrative costs


(11,112)


(13,000)

Other operating income and expense


1,500 


335 

Operating profit


4,114 


2,137 

Finance income


46 


78 

Finance expense


(1,075)


(963)

Share of after tax losses in joint ventures


(16)


(6)

Profit before tax


3,069 


1,246 

Taxation


(243)


(11)

Profit for the period


2,826 


1,235 

 





Other comprehensive income





Items that will not be reclassified to profit or loss





Remeasurement of the defined benefit pension liability


652 


(766)

Tax on items that will not be reclassified to profit or loss


(199)


216 

 


453 


(550)

Items that may be reclassified subsequently to profit or loss





Foreign exchange arising on consolidation


(528)


(823)

Foreign exchange arising on designating borrowings in net investment hedges


(333)


(529)

Fair value movements on derivatives designated in net investment hedges


14 


100 

Amortisation of loss on cash flow hedge



Net available for sale (losses)/gains taken to equity


(32)


245 

Tax on items that may be reclassified subsequently to profit or loss


87 


50 

 


(791)


(956)

Other comprehensive income for the period, net of tax


(338)


(1,506)

Total comprehensive income for the period


2,488 


(271)

 





Profit attributable to:





Owners of the Parent


2,825 


1,233 

Non-controlling interests



 


2,826 


1,235 

 





Total comprehensive income attributable to:





Owners of the Parent


2,488 


(266)

Non-controlling interests



(5)

 


2,488 


(271)

 





Basic earnings per $0.25 Ordinary Share


$2.23 


$0.98 

Diluted earnings per $0.25 Ordinary Share


$2.23 


$0.98 

Weighted average number of Ordinary Shares in issue (millions)


1,264 


1,262 

Diluted weighted average number of Ordinary Shares in issue (millions)


1,265 


1,264 

* 2014 comparatives restated for reclassification of Externalisation revenue (see Note 1)

 

Condensed Consolidated Statement of Comprehensive Income

 

For the quarter ended 31 December


2015 

$m 


Restated 

2014*

$m 

Product sales


6,207 


6,683 

Externalisation revenue


192 


33 

Total revenue


6,399 


6,716 

Cost of sales


(1,269)


(1,667)

Gross profit


5,130 


5,049 

Distribution costs


(99)


(88)

Research and development expense


(1,746)


(1,499)

Selling, general and administrative costs


(2,668)


(4,084)

Other operating income and expense


471 


273 

Operating profit


1,088 


(349)

Finance income


13 


33 

Finance expense


(292)


(260)

Share of after tax losses of joint ventures


(7)


(4)

Profit before tax


802 


(580)

Taxation



259 

Profit for the period


808 


(321)

 





Other comprehensive income





Items that will not be reclassified to profit or loss





Remeasurement of the defined benefit pension liability


618 


(268)

Tax on items that will not be reclassified to profit or loss


(187)


89 

 


431 


(179)

Items that may be reclassified subsequently to profit or loss





Foreign exchange arising on consolidation


(169)


(411)

Foreign exchange arising on designating borrowings in net investment hedges


(11)


(237)

Fair value movements on derivatives designated in net investment hedges


(10)


64 

Net available for sale gains taken to equity


31 


172 

Tax on items that may be reclassified subsequently to profit or loss



20 

 


(156)


(392)

Other comprehensive income for the period, net of tax


275 


(571)

Total comprehensive income for the period


1,083 


(892)

 





Profit attributable to:





Owners of the Parent


808 


(321)

Non-controlling interests



 


808 


(321)

 





Total comprehensive income attributable to:





Owners of the Parent


1,083 


(892)

Non-controlling interests



 


1,083 


(892)

 





Basic earnings/(loss) per $0.25 Ordinary Share


$0.63 


($0.25)

Diluted earnings/(loss) per $0.25 Ordinary Share


$0.63 


($0.25)

Weighted average number of Ordinary Shares in issue (millions)


1,264 


1,263 

Diluted weighted average number of Ordinary Shares in issue (millions)


1,265 


1,265 

* 2014 comparatives restated for reclassification of Externalisation revenue (see Note 1)

 

Condensed Consolidated Statement of Financial Position

 


At 31 Dec

2015

$m


At 31 Dec 2014

$m

ASSETS

Non-current assets





Property, plant and equipment


6,413 


6,010 

Goodwill


11,868 


11,550 

Intangible assets


22,646 


20,981 

Derivative financial instruments


446 


465 

Investments in joint ventures


85 


59 

Other investments


458 


502 

Other receivables


907 


1,112 

Deferred tax assets


1,294 


1,219 

 


44,117 


41,898 

Current assets





Inventories


2,143 


1,960 

Trade and other receivables


6,622 


7,232 

Other investments


613 


795 

Derivative financial instruments



21 

Income tax receivable


387 


329 

Cash and cash equivalents


6,240 


6,360 



16,007 


16,697 

Total assets


60,124 


58,595 

LIABILITIES

Current liabilities





Interest-bearing loans and borrowings


(916)


(2,446)

Trade and other payables


(11,663)


(11,886)

Derivative financial instruments


(9)


(21)

Provisions


(798)


(623)

Income tax payable


(1,483)


(2,354)



(14,869)


(17,330)

Non-current liabilities





Interest-bearing loans and borrowings


(14,137)


(8,397)

Derivative financial instruments


(1)


-

Deferred tax liabilities


(2,733)


(1,796)

Retirement benefit obligations


(1,974)


(2,951)

Provisions


(444)


(484)

Other payables


(7,457)


(7,991)



(26,746)


(21,619)

Total liabilities


(41,615)


(38,949)

Net assets


18,509 


19,646 

EQUITY





Capital and reserves attributable to equity holders of the Company





Share capital


316 


316 

Share premium account


4,304 


4,261 

Other reserves


2,036 


2,021 

Retained earnings


11,834 


13,029 

 


18,490 


19,627 

Non-controlling interests


19 


19 

Total equity


18,509 


19,646 

 

Condensed Consolidated Statement of Cash Flows

 

For the year ended 31 December


2015

$m 


2014 

$m 

Cash flows from operating activities





Profit before tax


3,069 


1,246 

Finance income and expense


1,029 


885 

Share of after tax losses in joint ventures


16 


Depreciation, amortisation and impairment


2,852 


3,282 

(Increase)/decrease in working capital and short-term provisions


(49)


2,508 

Gains on disposal of intangible assets


(961)


- 

Non-cash and other movements


(782)


865 

Cash generated from operations


5,174 


8,792 

Interest paid


(496)


(533)

Tax paid


(1,354)


(1,201)

Net cash inflow from operating activities


3,324 


7,058 

Cash flows from investing activities





Movement in short-term investments and fixed deposits


283 


34 

Purchase of property, plant and equipment


(1,328)


(1,012)

Disposal of property, plant and equipment


47 


158 

Purchase of intangible assets


(1,460)


(1,740)

Disposal of intangible assets


1,130 


- 

Purchase of non-current asset investments


(57)


(130)

Disposal of non-current asset investments


93 


59 

Payments to joint ventures


(45)


(70)

Upfront payments on business acquisitions


(2,446)


(3,804)

Payment of contingent consideration on business acquisitions


(579)


(657)

Interest received


123 


140 

Payments made by subsidiaries to non-controlling interests



(10)

Net cash outflow from investing activities


(4,239)


(7,032)

Net cash (outflow)/inflow before financing activities


(915)


26 

Cash flows from financing activities





Proceeds from issue of share capital


43 


279 

Issue of loans


5,928 


919 

Repayment of loans


(884)


(750)

Dividends paid


(3,486)


(3,521)

Hedge contracts relating to dividend payments


(51)


(14)

Repayment of obligations under finance leases


(42)


(36)

Payments to acquire non-controlling interest


- 


(102)

Movement in short-term borrowings


(630)


520 

Net cash inflow/(outflow) from financing activities


878 


(2,705)

Net decrease in cash and cash equivalents in the period


(37)


(2,679)

Cash and cash equivalents at the beginning of the period


6,164 


8,995 

Exchange rate effects


(76)


(152)

Cash and cash equivalents at the end of the period


6,051 


6,164 

Cash and cash equivalents consists of:





Cash and cash equivalents


6,240 


6,360 

Overdrafts


(189)


(196)



6,051 


6,164 

 

Condensed Consolidated Statement of Changes in Equity



Share
capital
$m


Share
premium
account
$m


Other
reserves*
$m


Retained
earnings
$m


Total 
$m 


Non-
controlling
interests
$m


Total
equity
$m

At 1 Jan 2014


315 


3,983


1,966 


16,960 


23,224 


29 


23,253 

Profit for the period


- 


-


- 


1,233 


1,233 


2 


1,235 

Other comprehensive income


- 


-


- 


(1,499)


(1,499)


(7)


(1,506)

Transfer to other reserves


- 


-


40 


(40)




Transactions with owners:















Dividends


- 


-


- 


(3,532)


(3,532)


- 


(3,532)

Issue of Ordinary Shares


1 


278


- 



279 


- 


279 

Share-based payments


- 


-


- 


(93)


(93)


- 


(93)

Transfer from non-controlling interests to payables


- 


-


- 


- 


- 


(5)


(5)

True-up to Astra AB non-controlling interest buy out


- 


-


15 



15 


- 


15 

Net movement


1 


278


55 


(3,931)


(3,597)


(10)


(3,607)

At 31 Dec 2014


316 


4,261


2,021 


13,029 


19,627 


19 


19,646 

 



Share
capital
$m


Share
premium
account
$m


Other
reserves*
$m


Retained
earnings
$m


Total 
$m 


Non-
controlling
interests
$m


Total
equity
$m

At 1 Jan 2015


316


4,261


2,021


13,029 


19,627 


19 


19,646 

Profit for the period


-


-


-


2,825 


2,825 



2,826 

Other comprehensive income


-


-


-


(337)


(337)


(1)


(338)

Transfer to other reserves


-


-


15


(15)




-

Transactions with owners:















Dividends


-


-


-


(3,537)


(3,537)



(3,537)

Issue of Ordinary Shares


-


43


-



43 



43 

Share-based payments


-


-


-


(131)


(131)



(131)

Net movement


-


43


15


(1,195)


(1,137)



(1,137)

At 31 Dec 2015


316


4,304


2,036


11,834 


18,490 


19 


18,509 

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

 

 

Notes to the Interim Financial Statements

1   BASIS OF PREPARATION AND ACCOUNTING POLICIES

The preliminary announcement for the year ended 31 December 2015 has been prepared in accordance with International Financial Reporting Standards (IFRSs) 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 IFRSs as adopted by the EU and as issued by the IASB. Except as detailed below, the preliminary announcement has 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.

 

Externalisation revenue

As announced on 6 March 2015, the Group updated its revenue accounting policy with effect from 1 January 2015. The Group's business model includes externalisation as a component of our portfolio management strategy. Externalisation stems from our increased R&D productivity and our focus on three main therapy areas. 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, is included in total revenue. Externalisation revenue includes development, commercialisation and collaboration 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 $452m of income being reclassified from other operating income to externalisation revenue for the year ended 31 December 2014, and $33m for the quarter ended 31 December 2014.

 

New accounting standards

The Group has adopted the amendments to IAS 19 Employee Benefits, 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 year ended 31 December 2015.

 

Legal proceedings

The information contained in Note 7 updates the disclosures concerning legal proceedings and contingent liabilities included in the Group's Annual Report and Form 20-F Information 2014 and Interim Financial Statements for the year ended 31 December 2015.

 

Going concern

The Group has considerable financial resources available. As at 31 December 2015 the Group has $8.3bn in financial resources (cash balances of $6.2bn and undrawn committed bank facilities of $3.0bn which are available until April 2020, with only $0.9bn of debt due within one year). Although no liability was recognised at 31 December 2015, the Group had entered into an agreement to invest in a majority equity stake in Acerta with an upfront payment of $2.5bn which was paid on 2 February 2016. 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 preliminary announcement has been prepared on a going concern basis.

 

Financial information

The financial information contained in the preliminary announcement does not constitute statutory accounts of the Group for the years ended 31 December 2015 and 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies and those for 2015 will be delivered in due course. Those accounts have been reported on by the Group auditor; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor 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. The quarterly information for the three month period to 31 December 2015 and to 31 December 2014 has not been subject to audit.

 

2  restructuring costs

Profit before tax for the year ended 31 December 2015 is stated after charging restructuring costs of $1,034m ($372m for the fourth quarter of 2015). These have been charged to profit as follows:

 



FY 2015
$m


FY 2014
$m


Q4 2015
$m


Q4 2014
$m

Cost of sales


158


107


34


35

Research and development expense


258


497


78


97

Selling, general and administrative costs


618


662


260


259

Other operating income and expense


-


292


-


-

Total


1,034


1,558


372


391

 

Net DEBT

The table below provides an analysis of net debt and a reconciliation of net cash flow to the movement in net debt.



At 1 Jan 

2015 

$m 


Cash 

Flow 

$m 


Non-cash

& Other

$m


Exchange Movements

$m


At 31 Dec 

2015 

$m 

Loans due after one year


(8,337)


(5,928)


40 


116 


(14,109)

Finance leases due after one year


(60)



31 



(28)

Total long-term debt


(8,397)


(5,928)


71 


117 


(14,137)












Current instalments of loans


(912)


884 



28 


- 

Current instalments of finance leases


(48)


42 


(63)



(67)

Total current debt


(960)


926 


(63)


30 


(67)












Other investments - current


795 


(244)


103 


(41)


613 

Net derivative financial instruments


465 


12 


(39)



438 

Cash and cash equivalents


6,360 


(39)



(81)


6,240 

Overdrafts


(196)





(189)

Short-term borrowings


(1,290)


630 




(660)



6,134 


361 


64 


(117)


6,442 

Net debt


(3,223)


(4,641)


72 


30 


(7,762)

Non-cash movements in the period include fair value adjustments under IAS 39.

 

 

4  ACQUISITION OF ZS Pharma

 

On 17 December 2015, AstraZeneca completed the acquisition of ZS Pharma, a biopharmaceutical company based in San Mateo, California. ZS Pharma uses its proprietary ion-trap technology to develop novel treatments for hyperkalaemia, a serious condition of elevated potassium in the bloodstream, typically associated with CKD and CHF.

 

The acquisition gives AstraZeneca access to the potassium-binding compound ZS-9, a potential best-in-class treatment for hyperkalaemia, which is under regulatory review by the US Food and Drug Administration with a Prescription Drug User Fee Act goal date of 26 May 2016. A submission for European Marketing Application Authorisation was made late in 2015.

 

ZS Pharma represents a strong fit with AstraZeneca's pipeline and portfolio in Cardiovascular and Metabolic Disease, one of the Company's three main therapy areas. AstraZeneca's strategy focuses on reducing morbidity, mortality and organ damage by addressing multiple risk factors across cardiovascular disease, diabetes and chronic kidney disease. ZS-9 complements the Company's increasing focus on CKD and CHF, including the investigational medicine roxadustat, which is currently in Phase III development for patients with anaemia associated with CKD, as well as its leading diabetes portfolio.

 

Under the terms of the agreement, AstraZeneca has acquired 100% of the share capital of ZS Pharma for $90 per share in an all-cash transaction, or approximately $2.7bn in aggregate transaction value.

 

ZS Pharma has around 200 employees across three sites in California, Texas and Colorado. The combination of intangible product rights with an established workforce and their associated operating processes, principally those related to research and development and manufacturing, requires that the transaction is accounted for as a business combination in accordance with IFRS 3.

 

Goodwill is principally attributable to the commercial synergies AstraZeneca expects to be able to realise upon launch of ZS-9, the value of the specialist know-how inherent in the acquired workforce and the accounting for deferred taxes. Goodwill of nil is expected to be deductible for tax purposes.

 

ZS Pharma's results have been consolidated into the Company's results from 17 December 2015. From the period from acquisition to 31 December 2015, ZS Pharma's revenue and loss were immaterial.

 

Given the proximity of the completion of the transaction to the date the Financial Statements were approved, the finalisation of the accounting entries for this transaction has yet to be completed. Our provisional assessment of the fair values of the assets and liabilities acquired is detailed below. Our assessment will be completed in 2016.

 




Fair value

$m

Non-current assets




Intangible assets



3,162 

Property, plant and equipment



21 




3,183 

Current assets



169 

Current liabilities



(50)

Non-current liabilities




Deferred tax liabilities



(1,045)

Other liabilities



(13)




(1,058)

Total net assets acquired



2,244 

Goodwill



456 

Total upfront consideration



2,700 

Less: cash and cash equivalents acquired



(73)

Less: deferred upfront consideration



(181)

Net cash outflow



2,446 

 

5  Agreement with ACERTA PHARMA

 

On 2 February 2016, AstraZeneca completed an agreement to invest in a majority equity stake in Acerta Pharma, a privately-owned biopharmaceutical company based in the Netherlands and US. The transaction provides AstraZeneca with a potential best-in-class irreversible oral Bruton's tyrosine kinase (BTK) inhibitor, acalabrutinib (ACP-196), currently in Phase II/III development for B-cell blood cancers and in Phase I/II clinical trials in multiple solid tumours.

 

Under the terms of the agreement, AstraZeneca has acquired 55% of the issued share capital of Acerta for an upfront payment of $2.5bn. A further payment of $1.5bn will be paid either on receipt of the first regulatory approval for acalabrutinib in the US, or the end of 2018, depending on whichever is sooner. The agreement also includes options which, if exercised, provide the opportunity for Acerta shareholders to sell, and AstraZeneca to buy, the remaining 45% of shares in Acerta. The options can be exercised at various points in time, conditional on the first approval of acalabrutinib in both the US and Europe and when the extent of the commercial opportunity has been fully established, at a price of approximately $3bn net of certain costs and payments incurred by AstraZeneca and net of agreed future adjusting items, using a pre-agreed pricing mechanism. Acerta has approximately 150 employees.

 

AstraZeneca's 55% holding is a controlling interest and Acerta's combination of intangible product rights with an established workforce and their operating processes requires that the transaction is accounted for as a business combination in accordance with IFRS 3. Acerta's results and net assets will be consolidated into the Company's results from 2 February 2016.

 

Given the close proximity of the completion of the transaction to the date the Financial Statements were approved, the accounting entries for this transaction have not yet been determined. Our provisional assessment of the fair values of the assets and liabilities acquired will be completed in 2016.

 

6  FINANCIAL INSTRUMENTS

 

As detailed in the Group's most recent annual financial statements, our principal financial instruments consist of derivative financial instruments, other investments, trade and other receivables, cash and cash equivalents, trade and other payables, and interest-bearing loans and borrowings. As indicated in Note 1, there have been no changes to the accounting policies for financial instruments, including fair value measurement, from those disclosed on pages 140 and 141 of the Company's Annual Report and Form 20-F Information 2014. In addition, there have been no changes of significance to the categorisation or fair value hierarchy of our financial instruments. Financial instruments measured at fair value include $1,071m of other investments, $1,753m of loans, and $438m of derivatives as at 31 December 2015. The total fair value of interest-bearing loans and borrowings at 31 December 2015, which have a carrying value of $15,053m in the Condensed Consolidated Statement of Financial Position, was $16,277m. Contingent consideration liabilities arising on business combinations have been classified under Level 3 in the fair value hierarchy and movements in fair value are shown below:

 



Diabetes

Alliance

2015


Other

 

2015


Total

 

2015


Total

 

2014



$m


$m


$m


$m

 At 1 January


5,386 


1,513 


6,899 


514 

 Additions through business combinations





6,138 

 Settlements


(325)


(254)


(579)


(657)

 Revaluations


(378)


(54)


(432)


512 

 Discount unwind


409 


115 


524 


391 

 Foreign exchange



(1)


(1)


 At 31 December


5,092 


1,319 


6,411 


6,899 

 

7 legal proceedings and contingent liabilities

AstraZeneca is involved in various legal proceedings considered typical to its business, including litigation and investigations relating to product liability, commercial disputes, infringement of intellectual property rights, the validity of certain patents, anti-trust law and sales and marketing practices. The matters discussed below constitute the more significant developments since publication of the disclosures concerning legal proceedings in the Company's Annual Report and Form 20-F Information 2014, the Company's Half-Yearly Financial Report for the six-month period to 30 June 2015, and the Third Quarter and Nine-Month Results 2015 (the Disclosures). Unless noted otherwise below or in the Disclosures, no provisions have been established in respect of the claims discussed below.

 

As discussed in the Disclosures, for the majority of claims in which AstraZeneca is involved it is not possible to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of the proceedings. In these cases, AstraZeneca discloses information with respect only to the nature and facts of the cases but no provision is made.

 

In cases that have been settled or adjudicated, or where quantifiable fines and penalties have been assessed and which are not subject to appeal, or where a loss is probable and we are able to make a reasonable estimate of the loss, we record the loss absorbed or make a provision for our best estimate of the expected loss.

 

The position could change over time and the estimates that we have made and upon which we have relied in calculating these provisions are inherently imprecise. There can, therefore, be no assurance that any losses that result from the outcome of any legal proceedings will not exceed the amount of the provisions that have been booked in the accounts. The major factors causing this uncertainty are described more fully in the Disclosures and herein.

 

AstraZeneca has full confidence in, and will vigorously defend and enforce, its intellectual property.

 

Matters disclosed in respect of the fourth quarter of 2015 to 4 February 2016.

 

Patent litigation

 

Byetta (exenatide)

Patent proceedings in the US

In November 2015, Sanofi-Aventis U.S. LLC and Sanofi-Aventis Deutschland GmbH (together, Sanofi) served AstraZeneca with a complaint for declaratory judgment that Sanofi's proposed lixisenatide product would not infringe three AstraZeneca patents. Sanofi also alleges invalidity of the patents. In December 2015, AstraZeneca filed an answer including counterclaims that Sanofi's proposed lixisenatide product would infringe several AstraZeneca patents. Certain patents-at-issue are listed in the FDA Orange Book with reference to Byetta. Proceedings are in early stages in the US District Court for the District of Delaware. No trial date has been set.

 

Separately, in December 2015, Sanofi filed petitions in the US Patent Trial and Appeals Board for inter partes review of certain patents that are also at issue in the above-referenced District Court litigation. Proceedings are in early stages.

 

In December 2015, AstraZeneca commenced patent litigation in response to a Paragraph IV notice from Amneal Pharmaceuticals LLC (Amneal) in the US District Court for the District of Delaware. The Amneal proceedings are at an early stage and no trial date has been set.

 

Crestor (rosuvastatin)

Patent proceedings in the US

As previously disclosed, AstraZeneca has been defending three patent infringement lawsuits in the US District Court for the District of South Carolina which, among other things, claim that AstraZeneca's Crestor sales induce infringement of the plaintiffs' patents. In December 2015, the court issued an order dismissing the first of these cases, which was filed by Palmetto Pharmaceuticals, LLC (Palmetto), and entered judgment in AstraZeneca's favour. In January 2015, Palmetto filed a notice of appeal.

 

Patent proceedings outside the US

As previously disclosed, in the UK, in October 2015, Resolution Chemicals Ltd. commenced an action alleging partial invalidity and non-infringement of the supplementary protection certificate related to the Crestor substance patent. AstraZeneca has responded.

 

As previously disclosed, in Australia, AstraZeneca was unsuccessful in defending the validity of Crestor-related patents, at trial and on appeal. This patent litigation concluded in September 2015 when the High Court of Australia dismissed an appeal filed by AstraZeneca. Relevant parties could pursue damages claims against AstraZeneca. A provision has been taken in respect of generic entities which were prevented by court order from launching their products in Australia before AstraZeneca's patents were subsequently found invalid.

 

Faslodex (fulvestrant)

Patent proceedings in the US

As previously disclosed, AstraZeneca is engaged in patent litigation against several companies that are seeking to market generic versions of Faslodex prior to the expiry of AstraZeneca's relevant FDA Orange Book listed patents. In November 2015 and February 2016, AstraZeneca filed patent infringement lawsuits against two additional companies that sent Paragraph IV notices relating to Faslodex to AstraZeneca.

 

Patent proceedings outside the US

As previously disclosed, in Brazil, in February 2013, Eurofarma Laboratorios S.A. (Eurofarma) filed a nullity action against a formulation patent for Faslodex in the 31st Specialized Intellectual Property Federal Court of Rio de Janeiro (the Court). In October 2015, the Court ruled in Eurofarma's favour and invalidated AstraZeneca's patent. In November 2015, AstraZeneca appealed the decision.

 

As previously disclosed, in Germany, in July 2015, AstraZeneca was served with a nullity complaint by Hexal AG (Hexal), commencing invalidity proceedings before the Federal Patent Court, and requesting revocation of the German part of a Faslodex formulation use patent, European Patent No. 1,250,138. In September 2015, AstraZeneca filed a request for a provisional injunction against Hexal in the Regional Court of Düsseldorf after Hexal threatened to launch a generic Faslodex product in the fourth quarter of 2015. The provisional injunction request was denied and AstraZeneca filed an appeal against this decision in November 2015. In December 2015, AstraZeneca filed an infringement suit against Hexal in the Regional Court of Mannheim referring to their threatened launch of a generic Faslodex product.

 

In October 2015, Hexal filed a notice of opposition against European Patent No. 2,266,573, a patent granted in June 2015. European Patent No. 2,266,573 is related to European Patent No. 1,250,138 referred to above.

 

Onglyza (saxagliptin) and Kombiglyze (saxagliptin and metformin)

Patent proceedings in the US

As previously disclosed, in June 2015, Mylan Pharmaceuticals, Inc. (Mylan) filed a petition for an inter partes review (IPR) with the US Patent and Trademark Office (USPTO) challenging the validity of US Patent No. RE44,186. In December 2015 the USPTO declined to institute the IPR (the December Decision). In January 2016, Mylan filed a Request for Rehearing with the USPTO seeking reconsideration of the December Decision.

 

Seroquel XR (quetiapine fumarate)

Patent proceedings outside the US

As previously disclosed, in France, in the third quarter of 2015, Mylan SAS (Mylan) launched its generic Seroquel XR product at-risk. In November 2015, AstraZeneca obtained a preliminary injunction against Mylan, which was overturned on appeal in December 2015.

 

As previously disclosed, Accord Healthcare France SAS and Accord Healthcare Limited (together, Accord) and AstraZeneca were involved in patent litigation in France regarding the French designation of the Seroquel XR formulation patent, European Patent No. 0,907,364. In January 2016, AstraZeneca settled the litigation with Accord.

 

In Germany, generic entities have claimed, or could claim, damages relating to the preliminary injunction issued in April 2012 that prevented generic Seroquel XR sales by those entities until the injunction was lifted following a November 2012 Federal Patent Court decision that held that the Seroquel XR patent was invalid. A provision has been taken.

 

Product liability litigation

 

Byetta/Bydureon (exenatide)

As previously disclosed, Amylin Pharmaceuticals, LLC, a wholly owned subsidiary of AstraZeneca, and/or AstraZeneca are among multiple defendants in various lawsuits filed in federal and state courts in the US involving approximately 2,500 claims of physical injury from treatment with Byetta and/or Bydureon. The lawsuits allege multiple types of injuries including pancreatitis, pancreatic cancer, thyroid cancer, and kidney cancer. A multi-district litigation has been established in the US District Court for the Southern District of California (the District Court) in regard to the alleged pancreatic cancer cases in federal courts. Further, a co-ordinated proceeding has been established in Los Angeles, California in regard to the various lawsuits in California state courts.

 

In November 2015, the District Court granted the defendants' motion for summary judgment and dismissed all claims alleging pancreatic cancer that accrued prior to 11 September 2015. The plaintiffs have appealed that ruling. A similar motion was granted in favour of the defendants in the California state co-ordinated proceeding, and judgment has not yet been entered.

 

A single case pending in Alabama state court has been set for trial on 21 June 2016. A motion for summary judgment is pending.

 

Farxiga (dapagliflozin)

AstraZeneca has been named as one of multiple defendants in a lawsuit filed in the US District Court for the Western District of Kentucky involving one plaintiff claiming physical injury, including diabetic ketoacidosis and kidney failure, from treatment with Farxiga.

 

Onglyza (saxagliptin)

As previously disclosed, Amylin Pharmaceuticals, LLC, a wholly owned subsidiary of AstraZeneca, and/or AstraZeneca are among multiple defendants in various lawsuits filed in federal and state courts in the US involving multiple plaintiffs claiming physical injury from treatment with Onglyza. The lawsuits allege injuries including pancreatic cancer. The lawsuit that was pending, and was previously disclosed, claiming congestive heart failure from treatment with Onglyza has been dismissed.

 

Commercial litigation

 

Nexium/Prilosec trademark litigation

As previously disclosed, AstraZeneca filed separate complaints in the US District Court for the District of Delaware against Camber Pharmaceuticals, Inc. (Camber) and Dr. Reddy's Laboratories, Inc. (Dr. Reddy's) to enforce certain AstraZeneca trademark rights related to Nexium and Prilosec. Dr. Reddy's has filed its own separate claims against AstraZeneca in both the US District Court for the District of Delaware (the Delaware District Court) as well as the US District Court for the District of New Jersey. The Delaware District Court has issued preliminary injunctions against Camber's and Dr. Reddy's sales of generic esomeprazole magnesium in purple capsules. Dr. Reddy's has appealed the decision of the Delaware District Court to the US Court of Appeals for the Third Circuit, and the appeal is pending. All cases related to this matter have been stayed pending this appeal.

 

Synagis (palivizumab)

As previously disclosed, in September 2011, MedImmune filed an action against AbbVie, Inc. (AbbVie) (formerly Abbott International, LLC) in the Circuit Court of Montgomery County, Maryland, seeking a declaratory judgment in a contract dispute. AbbVie's motion to dismiss was granted. In September 2011, AbbVie filed a parallel action against MedImmune in Illinois State Court and, as previously disclosed, trial began in August 2015. In September 2015, a jury returned a verdict in favour of AbbVie and awarded AbbVie damages in the amount of approximately $94m. In December 2015, MedImmune and AbbVie reached a settlement of this matter bringing this litigation to a conclusion.

 

Ocimum Lawsuit

In December 2015, AstraZeneca was served with a complaint filed by Ocimum Biosciences, Ltd. (Ocimum) in the Superior Court for the State of Delaware that alleges, among other things, breaches of contractual obligations and misappropriation of trade secrets, relating to a now terminated 2001 licensing agreement between AstraZeneca and Gene Logic, Inc. (Gene Logic), the rights to which Ocimum purports to have acquired from Gene Logic.

 

Government investigations/proceedings

 

Good Manufacturing Practices subpoena

As previously disclosed, in March 2013, AstraZeneca received a subpoena duces tecum from the US Attorney's Office in Boston seeking documents and information relating to products manufactured or packaged at AstraZeneca's Macclesfield facility in the UK. AstraZeneca co-operated with this inquiry which is now closed.

 


8 product analysis - FY 2015



World


US


Europe


Established ROW


Emerging Markets



FY 2015

$m


CER

%


FY 2015

$m


CER
%


FY 2015

$m


CER

%


FY 2015

$m


CER

%


FY 2015

$m


CER

%

 Respiratory, Inflammation & Autoimmunity:





















 Symbicort


3,394


(3)


1,520



1,076


(14)


404



394


22 

 Pulmicort


1,014


15 


200


(5)


117


(13)


88



609


35 

 Tudorza/Eklira


190


n/m 


103


n/m 


76


n/m 


9


n/m 


2


n/m 

 Daliresp


104


n/m 


104


n/m 


-



-



-


 Duaklir


27


n/m 


-



26


n/m 


1


n/m 


-


 Others


258


(5)


18


(31)


88


(6)


25



127


(1)

 Total Respiratory, Inflammation & Autoimmunity


4,987


7 


1,945


11 


1,383


(7)


527


5 


1,132


25 

 Cardiovascular & Metabolic disease:





















 Brilinta/Brilique


619


44 


240


64 


230


18 


37


33 


112


91 

 Onglyza


786



420


(13)


141



66


27 


159


41 

 Bydureon


580


35 


482


29 


81


65 


8


80 


9


150 

 Farxiga/Forxiga


492


137 


261


114 


126


126 


32


124 


73


n/m 

 Byetta


316



209



62


(11)


22


(7)


23


30 

 Legacy:





















 Crestor


5,017


(3)


2,844


(3)


916


(9)


571


(1)


686


 Seloken/Toprol-XL


710



89


(2)


97


(6)


12


(26)


512


 Atacand


358


(15)


34


(23)


105


(26)


26


(30)


193


(4)

 Others


611


(10)


55


(28)


143


(15)


60


(15)


353


(3)

 Total Cardiovascular & Metabolic Disease


9,489


4 


4,634


4 


1,901


(1)


834


1 


2,120


11 

 Oncology:





















 Iressa


543


(2)


6


n/m 


128


(8)


137


(10)


272


 Lynparza


94


n/m 


70


n/m 


23


n/m 


-



1


n/m 

 Tagrisso


19


n/m 


15


n/m 


4


n/m 


-



-


 Legacy:





















 Zoladex


816



28



171


(12)


272


(2)


345


27 

 Faslodex


704



356



207



54



87


49 

 Casodex


267


(6)


1


(80)


30


(14)


131


(11)


105


 Arimidex


250


(5)


19


27 


49


(24)


79


(17)


103


16 

 Others


132



19


(24)


23


(18)


60


44 


30


 Total Oncology


2,825


7 


514


25 


635


(4)


733


(4)


943


18 

 Infection, Neuroscience & Gastrointestinal:





















 Nexium


2,496


(26)


902


(52)


284


(7)


549



761


 Seroquel XR


1,025


(12)


716


(3)


202


(30)


25


(34)


82


(1)

 Synagis


662


(26)


285


(43)


377


(6)


-



-


 Losec/Prilosec


340


(10)


18


(32)


97


(10)


74


(19)


151


(1)

 FluMist/Fluenz


288



206


(6)


76


16 


7


14 


(1)


(100)

 Movantik/Moventig


29


n/m 


28


n/m 


1


n/m 


-



-


 Others


1,500



226


50 


367


(15)


273


(3)


634


 Total Infection, Neuroscience & Gastrointestinal


6,340


(16)


2,381


(32)


1,404


(13)


928


(1)


1,627


2 

23,641


(1)


9,474


(6)


5,323


(6)


3,022


- 


5,822


12 

 

9 product Sales analysis - Q4 2015           



World


US


Europe


Established ROW


Emerging Markets



Q4 2015

$m


CER

%


Q4 2015

$m


CER
%


Q4 2015

$m


CER

%


Q4 2015

$m


CER

%


Q4 2015

$m


CER

%

 Respiratory, Inflammation & Autoimmunity:





















 Symbicort


859


(6)


410



251


(18)


100


(5)


98


(3)

 Pulmicort


274



52


(7)


29


(20)


27



166


24 

 Tudorza/Eklira


47


n/m 


26


n/m 


19


n/m 


2


n/m 


-


n/m 

 Daliresp


32


n/m 


32


n/m 


-



-



-


 Duaklir


12


n/m 


-



12


n/m 


-



-


 Others


65


(4)


6


50 


22


(8)


7


33 


30


(13)

 Total Respiratory, Inflammation & Autoimmunity


1,289


4 


526


15 


333


(12)


136


- 


294


9 

 Cardiovascular & Metabolic disease:





















 Brilinta/Brilique


174


43 


70


63 


60


15 


10


33 


34


86 

 Onglyza


192



98


(3)


33


(14)


18


24 


43


29 

 Bydureon


155


28 


122


18 


25


56 


2


100 


6


n/m 

 Farxiga/Forxiga


152


76 


77


45 


37


72 


10


71 


28


n/m 

 Byetta


72


10 


43


10 


17



7


14 


5


67 

 Legacy:





















 Crestor


1,322



777



225


(9)


154



166


 Seloken/Toprol-XL


160



19


27 


24


(10)


3


(25)


114


 Atacand


86


(15)


7


(36)


25


(19)


5


(33)


49


(7)

 Others


147


(9)


14


(7)


35


(13)


16



82


(9)

 Total Cardiovascular & Metabolic Disease


2,460


6 


1,227


8 


481


(2)


225


8 


527


11 

 Oncology:





















 Iressa


129


(5)


4


n/m 


32


(12)


35


(7)


58


(5)

 Lynparza


36


n/m 


24


n/m 


11


n/m 


-



1


n/m 

 Tagrisso


18


n/m 


15


n/m 


3


n/m 


-



-


 Legacy:





















 Zoladex


198



6