Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on AstraZeneca. We currently have 92 research reports from 8 professional analysts.
The cancer burden is growing globally. Each year >18 million people are diagnosed, nearly 10 million die and the estimated economic cost exceeds $1 trillion. From early diagnosis to late-stage disease, cancer care often involves inappropriate or unnecessary interventions that drive costs but provide limited clinical benefit. Coupled with an increased understanding of cancer biology and rapid technological advances, this has been driving momentum for precision medicine, leading to patient and societal benefits. The use of biomarkers and sophisticated diagnostics is facilitating early intervention through robot-enabled minimally invasive surgery and locally delivered radiotherapy. Immuno-oncology has revolutionised cancer care, with the focus now on identifying combinations that further improve long-term outcomes. Liquid biopsies and companion diagnostics are increasingly being used to personalise therapy.
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Excellent performance by new drugs at AstraZeneca led to 18% growth in the group’s sales, while the core operating profit grew by 8%, both outperforming the street as well as our expectations. Oncology continued to be at the forefront of this growth, supported by CVRM and respiratory. Top-line guidance for the year was upped, while core EPS guidance was maintained.
Companies: AZN AVO AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR HAYD KOOV MCL MUR PCA PHP RE/ REDX STX SIXH TON SHED VAL VTA W7L
Historically, AstraZeneca (AZN) was a leading global pharmaceutical company, but it has slipped down the rankings following a period of patent expiry on major drugs, notably Nexium, Losec and Seroquel. Understandably, the financial performance, particularly operational cashflow, has suffered through this period and AZN has moved from a net cash ($339m) position in 2009 to net debt of $16.3bn at the end of 1Q’19, necessitating a cash call. Better planning, notably earlier cessation of share buybacks and re-basing its dividend, would have left it in a much stronger position. Meanwhile, its use of ‘core’ EPS greatly overstates true performance.
AstraZeneca reported solid growth in the top-line, although profitability (at the reported level) fell short of the street’s expectations. Top-line was driven by broad-based growth across the franchise (barring some mature products), led by oncology. Emerging Markets engineered this robust performance, mitigating the deceleration in Europe. Under-performing profitability was a factor of higher sales and marketing investments on new drugs. FY 2019 guidance was reiterated.
AstraZeneca is entering into a licensing deal with Japanese Daiichi Sankyo for a cancer drug candidate under development. The total value of the transaction is $6.9bn, of which AstraZeneca will be paying Daiichi $1.35bn upfront, $3.8bn on achieving regulatory and other milestones, and $1.75bn after hitting some sales targets. The two companies will be sharing the development and selling costs equally, along with the global profits (except Japan) – Daiichi will book the sales in US and parts of Europe, while AstraZeneca will do so in the other markets including China, Australia, Canada and Russia. AstraZeneca will be raising fresh equity of $3.5bn to fund this transaction and for paying part of the debt.
AstraZeneca finally returns to growth. Q4 top-line was largely in line with the street’s expectations but lower than our estimates. Product sales were healthy, delivering a CER growth of 8% to $5.8bn, taking the total sales figure for the quarter to $6.4bn (+14% at CER). Core EPS grew by 22% to $1.8, again ahead of the expectations. The commentary in the conference call was quite positive and exuded strong focus, discipline and confidence.
Robust product sales by AstraZeneca in Q3, as it turns the corner and gets ready for the growth phase. The new drugs and the Emerging Markets (EMs), particularly China, came out as the highlights of the quarter. Profitability continued to decline but this is already discounted and the company should start working on the cost side from 2019. A big disappointment, however, was the failure of Imfinzi in the MYSTIC trial, yet again.
The Q2 results did not throw up any surprises, but the generic erosion was seen as tapering down and the new products rising to the occasion. The oncology drug, Tagrisso, has been showing an excellent trajectory while the other oncology drugs are lending good support. The overhang of genericisation continued to weigh on the legacy drugs but respiratory’s resilience during the quarter was a positive development. The last six months have been mixed for R&D, which otherwise is well stocked.
AstraZeneca reported strong results in Q4, although partly driven by one-offs. The oncology business has become heavy in terms of potential, following the launches last year. This has raised our confidence of the company’s ability to repeat this performance in the commercial delivery of these drugs.
The exclusive license deal is made up of cash and shares, meaning AstraZeneca will become a shareholder in Mereo.
Companies: AstraZenecaMereo Biopharma Group
AstraZeneca’s biggest event of the year, a trial evaluating the Imfinzi and tremelimumab combination in the Progression Free Survival (PFS) for lung cancer patients (in a study called MYSTIC), has failed in the first round, wiping out over £10bn from AstraZeneca’s market cap (share price fell by 15%) on 27 July. The combination could not beat chemotherapy at stopping disease progression in PD-L1 patients. Although the final study, assessing Overall Survival (OS), is still underway, this failure has reduced the chances significantly. This news totally overshadowed the strong Q2 results – while the drug sales came in largely as we expected, continued cost control beat the street’s estimates. The product sales’ decline of 8% at CER to $4.9bn and the externalisation revenue decline of 15% to $111m, summed up to group sales of $5bn (-8% at CER and -10% in $). NB all revenue growth numbers at CER unless specified otherwise. Also in this quarter, oncology was the only segment to report growth (+20%), while cardiovascular and metabolic diseases (-17%), respiratory (-9%) and others (-12%) continued to decline. The adjusted operating profit (excluding restructuring expenses) came in at $1.1bn, thanks to the cost savings and higher-than-expected other income. The company was able to reduce marketing expenses significantly (-20% adjusted) as well as COGS (-13% adjusted). The outlook for the year has been maintained at a low-to-mid single-digit decline in sales and a low-to-mid teens percentage decline in core EPS. Considering the company-reported a core EPS improvement of 6% CER to $0.87 during the quarter and of 1% CER to $1.86 in H1, the guidance for the full year indicates a substantial decline in H2.
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Research Tree provides access to ongoing research coverage, media content and regulatory news on AstraZeneca. We currently have 92 research reports from 8 professional analysts.
|17Oct19 07:00||RNS||Trastuzumab deruxtecan granted FDA Priority Review|
|04Oct19 15:04||RNS||Holding(s) in Company|
|04Oct19 15:00||RNS||Holding(s) in Company|
|04Oct19 07:00||RNS||Fasenra approved in the US for self-administration|
|03Oct19 16:00||RNS||Director Declaration|
|01Oct19 15:00||RNS||Total Voting Rights|
|01Oct19 07:05||RNS||AstraZeneca divests rights for Losec to Cheplaphar|
Last week, OPTI announced two major milestones for marketed ingredient LP-LDL, currently sold as a probiotic in foods and food supplements for the reduction of cholesterol: (1) achievement of process validation under good manufacturing practices ("GMP"), a necessary step in developing LP-LDL as a pharmaceutical drug; (2) confirmation of generally regarded as safe ("GRAS") status by the FDA. Both milestones reflect OPTI's commitment to improving the quality of the science and manufacturing conditions for probiotics to bring them closer to pharmaceutical standards. They should increase LP-LDL's attractiveness to both food companies looking to differentiate their products with evidence-backed ingredients and pharma companies looking to target the microbiome with live bacteria. With both events taking OPTI closer to achieving our forecasts and hence valuation expectations, we reiterate our OUTPERFORM recommendation and target price of GBp97 per share.
Companies: Optibiotix Health
Full-year results were in line with July’s trading update. Revenues grew by 18% CER, with a stronger-than-expected UK performance (+9% vs +2% in FY 2018), driven in part by the launch of new products, supporting the continued expansion in international markets (+26%) that now account for 55% of group revenues. The expected response to Tristel’s pre-submission request to the FDA, expected in December, should help determine the next steps for US registration. We maintain our FY 2020 adjusted pre-tax profit forecasts (+16%) with changes to reflect IFRS16 and introduce FY 2021 forecasts for 10% and 7% revenue and EPS growth. These are towards the bottom of Tristel’s newly set three-year financial plan, which bodes well for potential upside given the strong delivery over the past three years. Our unchanged 325p target price implies a 4% FY 2020 FCF yield.
IXICO has released a trading update for FY19 (YE September), announcing revenues of £7.6m and a first full year EBITDA profit, driven by accelerated revenue growth. Revenues for the year are ~6% ahead of our previous forecast and ~15% ahead of our ‘initiation' forecast (29 Apr 19). Having reported an EBITDA profit for H1/19A, the company is expecting to deliver a full year EBITDA profit, supported by strong revenue growth and operational leverage. We have upgraded our forecasts to reflect this update. IXICO's strong revenue generation and operational gearing support our BUY recommendation.
Since their privatisation in 1989, the 10 water companies have faced a periodic review every five years; it is undertaken by Ofwat, and prescribes customer prices, along with the investment requirements. As part of the ongoing review, PR19, Ofwat will publish its Final Determination numbers on 11 December 2019; they will apply as from April 2020, although water companies do have the option to seek a reference to the CMA.
Companies: AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR KOOV MCL MUR NSF PCA PIN PHP RE/ RECI RMDL STX SCE SIXH TON SHED VTA W7L
Avacta has announced a collaboration and licensing agreement with ADC Therapeutics to develop multiple Affimer drug conjugates. The conjugates will combine Avacta’s Affimers with ADC’s warhead and linker technology. The collaboration is multi-target and will aim to generate Affimer binders to three undisclosed cancer targets. ADC will be responsible for all pre-clinical research and development except for Affimer selection, which will be carried out by Avacta. The agreement includes an option on each target to gain an exclusive clinical and commercial licence. Avacta will also be eligible to receive option fees, development and commercial milestones and single-digit royalties. Additionally, ADC will cover Avacta’s costs during the collaboration. No further financial details were announced. We retain our valuation of Avacta at £51m or 44p/share.
Companies: Avacta Group
Oxford BioMedica (OXB) is a gene-based medicine viral-vector biopharma company. It offers vector manufacturing and development services, while developing proprietary therapies, with its LentiVector® platform. Growth in gross income and profitability were driven by new licensing deals in 2018. Despite steady growth in 1H’19 group sales (bioprocessing and commercial development), a reduction in licensing income resulted in a first-half operating loss; the absence of significant deals in 2019 has also dampened the shares. Although interim results were in line with our expectations, they highlight the importance of 2H’19 for a full-year profit.
Companies: Oxford Biomedica
In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.
Companies: AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE CYAN DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR HYR IBPO IOG INDI JHD JOG KAPE KEYS KCT KGH LAM LIT LOK MACF MANO PCA PANR PXC PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG SOM TWD TRAK TSG TRI VNET VTC ZOO ZTF
LiDCO reported interims to 31 July 2019, which contained no surprises in light of the 20 August trading update, although the revenue mix was slightly different to the anticipated figure. H1 performance continued to be influenced by the transition, particularly in the UK, from capital sales to SaaS licenced High Usage Programme (HUP) monitors, which typically results in destocking of older smartcard consumables ahead of the transition, as well as being able to recognise only part of the annual licence fee depending on timing. Despite this, LIDCO product revenues increased 10%, resulting in substantially reduced adjusted LBITDA and pre-tax loss of £0.2m (vs. -£0.8m) and £0.8m (vs. -£1.3m), respectively, demonstrating the operational leverage within the business. We remain confident that the pipeline of HUP interest, given the inherent economic benefits that HUP offers to high volume users, will convert to long-term licence revenue. We leave our adjusted pre-tax forecast unchanged and reiterate our 11p price target.
Companies: Lidco Group
We are just back from a two-day visit to Genus's bovine business, ABS, in Madison, Wisconsin. We met with all the key ABS leadership team, Genus's new global head of R&D and visited a dairy customer.
Q2 results on 11th October were in line with expectations, with cash at period-end of £20.9m and the Phase III trial of ridinilazole on track to report top-line data in H2 2021. As a reminder, the Phase III programme of ridinilazole comprises two global trials run broadly concurrently, each expected to recruit approx. 680 patients with CDI (confirmed by clinical symptoms and a positive CDI toxin test). The primary endpoint is the efficacy of ridinilazole (200mg twice a day) vs. vancomycin (125mg four times a day) as measured by sustained clinical response (the primary endpoint met in Phase II), in addition to which a number of health-economic parameters will be assessed to support market uptake post approval. We continue to expect filing of ridinilazole in 2022, and forecast a peak sales potential of >$300m in the US alone, with substantial upside from other major markets.
Companies: Summit Therapeutics
Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.
Companies: OPM ALU ANCR BLV CONN CRC STU GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM
Circassia is a specialty pharmaceutical company, focused on respiratory disease, with three approved products in the US and one that is soon to be filed at the FDA. Operational leverage, given the largely fixed infrastructural costs already in place, c.27% CAGR 2019-2024 revenue forecast and a deleveraging balance sheet should drive substantial incremental value in our opinion. The interim results point to this, with period-end cash of £21m and positive EBITDA targeted on £75m of annual sales (ie. in 2020). We initiate with a target price of 80p, which implies the stock trading on a 2021 EV/Sales multiple of 3.7x and includes first full-year sales of Duaklir. The prospect of LungFit PH approval and launch in 2020 and profitability in 2021 is expected to drive the target higher in months to come as management executes on its strategy.
Companies: Circassia Pharmaceuticals
This morning’s additional Phase IIa data on the hRPC programme in Retinitis Pigmentosa (RP) is very encouraging, with all treated patients to date demonstrating an improvement in visual acuity from baseline. We look forward to more detailed results to be released on 12th October at the American Academy of Ophthalmology Annual Meeting (AAO) in San Francisco. As a reminder, RP is a large Orphan disease (around 100,000 cases in the US pa) with no current treatment options. The disease affects the photoreceptors of the retina, and most patients will be legally blind by the age of 40. Following completion of the Phase IIa programme in 2020e, we expect the RP programme to follow an accelerated regulatory pathway, consistent with its Orphan Drug Designation (in both the US and Europe) and FDA Fast Track status. We reiterate our positive stance on ReNeuron.
Companies: Reneuron Group
Verona Pharma has a pleasing habit of delivering important trial results on schedule, and this morning’s announcement, confirming the completion of recruitment in the Phase IIb trial of nebulised ensifentrine in moderateto-severe COPD, is no exception. We continue to look forward to data from the 416-patient, 46-centre trial around year-end, to be followed by an end-of-Phase II meeting with the FDA in H1 2020e and the start of Phase III trials in 2020, in line with previous guidance. Positive data would add to an already substantial body of clinical evidence supporting the utility of ensifentrine in COPD, including improved lung function, improved symptoms and synergistic effects with standard therapy.
Companies: Verona Pharma
Intelligent Ultrasound (IU) has announced an agreement with the ultrasound manufacturer FUJIFILM SonoSite (SonoSite) which will see the two companies deliver training for physicians undertaking point-of-care ultrasound (POCUS). For SonoSite, the agreement will accelerate the training of its POCUS system users, enhancing the value of its products, while we expect the agreement to raise the profile of IU's recently launched POCUS training platform (BodyWorks Eve) with potential simulator customers. We maintain our Buy recommendation.
Companies: Medaphor Group