By Denise Roland
LONDON-- AstraZeneca PLC on Friday reported a fall in
first-quarter revenue and profit as the company invests in new
drugs, while sales of its older blockbusters are eroded by cheaper
rivals.
The U.K.-based company said core net profit fell to $1.37
billion in the quarter ended March 31, 7% lower than a year
earlier, or 3% at constant exchange rates.
Revenue from product sales fell to $5.75 billion--a drop of 10%,
or 3% at constant exchange rates. Analysts surveyed by Dow Jones
forecast core net profit of $1.37 billion and revenue of $5.68
billion. Total revenue, which for the first time included income
from licensing deals, increased 1% to $6.06 billion at constant
exchange rates.
But the company was eager to direct the focus onto its pipeline
of new drugs, especially those in a hot research area known as
immuno-oncology, which looks at strengthening the body's own immune
defenses to fight cancer.
AstraZeneca reported two new licensing deals in this area, both
aimed at broadening the applications of immuno-oncology drugs in
its own pipeline.
It will pay French biotech Innate Pharma SA up to $1.28 billion
to exclusively co-develop and commercialize a drug known as IPH2201
as a combination therapy with its own drugs. It will also pay
royalties on eventual sales.
Astra has also done a deal with Celgene Corporation, whereby
Celgene will pay the U.K.-based drug maker $450 million to develop
one of its immuno-oncology treatments in a range of blood
cancers.
Celgene will fund the research program until the end of 2016,
then take on 75% of the development costs. It will also receive a
70% royalty on any future sales of AstraZeneca's drug, known as
MEDI4736, in blood cancers, though the rate will reduce to 50% over
the first four years.
AstraZeneca is separately developing this drug in lung and head
and neck cancers.
Pascal Soriot, chief executive, described the deal as
"transformational" and said that while AstraZeneca would be
sacrificing half of future sales in blood cancer, the deal meant
AstraZeneca "gets 50% of a better value proposition".
AstraZeneca's immuno-oncology pipeline is a key plank in the
company's long-term aim of nearly doubling annual revenue to $45
billion by 2023--a target it unveiled while defending itself
against a GBP69 billion ($104 billion) takeover approach last year
by Pfizer Inc. However, it faces fierce competition from rivals
such as Merck and Roche. While it is lagging behind these two in
developing a lung cancer treatment, AstraZeneca is betting on using
combinations of a broad range of cancer therapies to gain an edge
in the long term.
"[Immuno-oncology] is a very complex approach and the company
that has the chance to win is the company that has more than one
card," said Mr Soriot. He noted that the company's oncology
research program was now running 72 trials, including 31 in
immuno-oncology.
The AstraZeneca boss described the results as "encouraging" and
maintained full-year guidance of a mid-single digit percentage
decline in revenue and a low-single digit increase in core earnings
per share.
He also highlighted the strong performance of the company's
so-called "growth platforms"--the products or regions it is betting
on as the main sources of future revenue. These areas, spanning
heart drug Brilinta, lung drugs, diabetes, cancer, emerging markets
and Japan, accounted for 56% of total revenue.
Write to Denise Roland at Denise.Roland@wsj.com
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