On July 27, 2017 AstraZeneca, 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, autoimmune disease (RIA), cardiovascular and metabolic disease (CVMD) and oncology – as well as in infection and neuroscience reported financial results for the first half of 2017 ended June 30, 2017 (Press release, AstraZeneca, JUL 27, 2017, View Source [SID1234519936]).

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Financial Summary
H1 2017Q2 2017
$m% change$m% change
Actual1CER2ActualCER
Total Revenue10,456(11)(9)5,051(10)(8)
Product Sales9,783(11)(10)4,940(10)(8)
Externalisation Revenue673(2)(1)111(17)(15)

Reported Operating Profit1,8423722925n/mn/m
Core Operating Profit33,215731,548108

Reported Earnings Per Share (EPS)$0.805841$0.38n/mn/m
Core EPS3$1.8651$0.8756
Financial Highlights
● The residual effects of the Crestor and Seroquel XR loss of exclusivity in the US impacted Product Sales
● Cost discipline continued:
o Reported R&D costs declined by 5% (1% at CER) to $2,802m
o Core R&D costs declined by 7% (4% at CER) to $2,617m
o Reported SG&A costs declined by 17% (15% at CER) to $4,658m
o Core SG&A costs declined by 12% (9% at CER) to $3,728m
● Reported Other Operating Income and Expense increased by 97% (101% at CER) to $839m; Core Other Operating Income and Expense increased by 105% (108% at CER) to $958m
● Reported EPS increased by 58% (41% at CER) to $0.80; Core EPS increased by 5% (1% at CER) to $1.86
● An unchanged first interim dividend of $0.90 per share
● Financial guidance for 2017 reiterated
Commercial Highlights
● The Growth Platforms grew by 2% (3% at CER) and represented 70% of Total Revenue:
● Emerging Markets: 3% growth (6% at CER), underpinned by China sales growth of 3% (8% at CER). Economic conditions in Latin America and Saudi Arabia limited overall Emerging Markets growth
● Respiratory: A decline of 6% (4% at CER), reflecting the competitive environment for Symbicort in the US
● New CVMD4: Growth of 3% (4% at CER). Brilinta growth of 26% (28% at CER) and Farxiga growth 22% (22% at CER), offset by other Diabetes
● Japan: Growth of 7% (6% at CER), with an accelerated performance in Q2 2017 reflecting the strong uptake of Tagrisso
● New Oncology5: Sales of $537m (H1 2016: $251m); particularly encouraging growth of Tagrisso. Lynparza’s US performance reflected the current indication
Achieving Scientific Leadership
The table below highlights the development of the late-stage pipeline since the last results announcement:
Regulatory ApprovalsImfinzi (durvalumab) – bladder cancer (US)
Faslodex – breast cancer (1st line) (EU, JP)
Kyntheum (brodalumab) – psoriasis (EU, received by partner)
Regulatory Submission AcceptancesLynparza – ovarian cancer (2nd line) (EU, JP)
Bevespi – chronic obstructive pulmonary disease (COPD) (EU)
Phase III or Major Data ReadoutsImfinzi – lung cancer (PACIFIC)
Bydureon – type-2 diabetes cardiovascular outcomes trial (met primary safety objective, did not meet primary efficacy objective)
tralokinumab – severe, uncontrolled asthma (did not meet primary endpoint)
Pascal Soriot, Chief Executive Officer, commenting on the results said:
“Our performance in the first half was in line with expectations as we experience the loss of exclusivity of Crestor and Seroquel XR in the US. We continued to deliver transformative science across the pipeline, particularly in Oncology. Imfinzi was launched in bladder cancer while we published practice-changing data in breast cancer for Lynparza, our first-in-class PARP inhibitor. In lung cancer, we strengthened our unique portfolio focused on both the genetic drivers of disease and immunotherapy. In the first half, we shared positive results for Imfinzi in the PACIFIC trial and reported more encouraging data for Tagrisso in patients with central nervous system metastases.
“I’m excited about our pipeline-driven transformation as we continue to deliver for shareholders on our strategy to return to sustainable long-term growth. In a pivotal year for AstraZeneca, we remain focused on realising the potential of our pipeline, growing our new launch medicines and bringing our strong science to patients.”
FY 2017 Guidance: Reiterated
The Company provides guidance on Total Revenue and Core EPS only. All commentary in this section is at CER and is unchanged from the prior results announcement:
Total RevenueA low to mid single-digit percentage decline
Core EPSA low to mid teens percentage decline*
*The Core EPS guidance anticipates a normalised effective Core tax rate in FY 2017 of 16-20% (FY 2016: 11%)
Guidance is subject to base-case assumptions of the progression of the pipeline and the extensive level of news flow listed on the following page. Variations in performance between quarters can be expected, with year-on-year comparisons expected to begin to ease in the second half of the year, given the recent annualisation of the impact of the entry of multiple Crestor generic medicines in the US.
The Company presents Core EPS guidance only at CER. It is unable to provide guidance on a Reported/GAAP basis because the Company cannot reliably forecast material elements of the Reported/GAAP result, including the fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal settlement provisions. Please refer to the section ‘Cautionary Statements Regarding Forward-Looking Statements’ at the end of this announcement.
In addition to the unchanged guidance above, the Company also provides unchanged indications in other areas of the Income Statement. The sum of Externalisation Revenue and Other Operating Income and Expense in
FY 2017 is anticipated to be ahead of that in FY 2016. Sustainable and ongoing income6 is expected to increase further as a proportion of total Externalisation Revenue in FY 2017 (FY 2016: 21%). Core R&D costs are expected to be broadly in line with those in FY 2016 and the Company anticipates a further reduction in Core SG&A costs in FY 2017, reflecting the evolving shape of the business. A full explanation is listed in the Operating & Financial Review.
FY 2017 Currency Impact
Based only on average exchange rates in H1 2017 and the Company’s published currency sensitivities, the Company continues to expect a low single-digit percentage adverse impact from currency movements on Total Revenue and a minimal impact on Core EPS. Further details on currency sensitivities are contained within the Operating and Financial Review.
Notes
1. All growth rates are shown at actual exchange rates, unless stated otherwise.
2. Constant exchange rates. These are non-GAAP measures because they remove the effects of currency movements from Reported results.
3. Core financial measures. These are non-GAAP measures because, unlike Reported performance, they cannot be derived directly from the information in the Group Financial Statements. See the Operating and Financial Review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.
4. New Cardiovascular and Metabolic Diseases, incorporating Brilinta and Diabetes.
5. New Oncology, comprising Lynparza, Tagrisso, Iressa (US) and Imfinzi.
6. Sustainable and ongoing income is defined as Externalisation Revenue, excluding initial revenue.
7. All commentary in this announcement refers to the performance in H1 2017, unless stated otherwise.
Pipeline: Forthcoming Major News Flow
Innovation is critical to addressing unmet patient needs and is at the heart of the Company’s growth strategy. The focus on research and development is designed to yield strong results from the pipeline.
Mid-2017Imfinzi +/- tremelimumab (treme) – lung cancer (MYSTIC): Data readout
H2 2017Faslodex – breast cancer (1st line): Regulatory decision (US)
Lynparza – ovarian cancer (2nd line): Regulatory decision (US)
Lynparza – breast cancer: Regulatory submission
Tagrisso – lung cancer (1st line): Data readout, regulatory submission
Imfinzi – lung cancer (PACIFIC): Regulatory submission
Imfinzi +/- treme – lung cancer (MYSTIC): Regulatory submission
Imfinzi +/- treme – lung cancer (ARCTIC): Data readout, regulatory submission
acalabrutinib – blood cancer: Regulatory submission (US) (Phase II)*
moxetumomab – leukaemia: Data readout
Bydureon – autoinjector: Regulatory decision (US), regulatory submission (EU)
benralizumab – severe, uncontrolled asthma: Regulatory decision (US)
tralokinumab – severe, uncontrolled asthma: Data readout
H1 2018Lynparza – ovarian cancer (2nd line): Regulatory decision (EU, JP)
Lynparza – ovarian cancer (1st line): Data readout, regulatory submission
Imfinzi +/- treme – head& neck cancer (KESTREL): Data readout
Imfinzi +/- treme – head & neck cancer (EAGLE): Data readout
moxetumomab – leukaemia: Regulatory submission
selumetinib – thyroid cancer: Data readout, regulatory submission
Bevespi – COPD: Regulatory submission (JP)
Duaklir – COPD: Regulatory submission (US)
benralizumab – severe, uncontrolled asthma: Regulatory decision (EU, JP)
tralokinumab – severe, uncontrolled asthma: Regulatory submission
PT010 – COPD: Data readout
H2 2018Imfinzi + treme – lung cancer (NEPTUNE): Data readout, regulatory submission
Imfinzi +/- treme – head& neck cancer (KESTREL): Regulatory submission
Imfinzi +/- treme – head & neck cancer (EAGLE): Regulatory submission
Imfinzi +/- treme – bladder cancer (DANUBE): Data readout, regulatory submission
roxadustat – anaemia: Regulatory submission (US)
Bevespi – COPD: Regulatory decision (EU)
benralizumab – COPD: Data readout, regulatory submission
PT010 – COPD: Regulatory submission (JP)
anifrolumab – lupus: Data readout
The term ‘data readout’ in this section refers to Phase III data readouts, unless stated otherwise.
*Potential fast-to-market opportunity ahead of randomised, controlled trials.

On July 27, 2017 Roche reported strong performance in the first half of 2017 (Press release, Hoffmann-La Roche, JUL 27, 2017, View Source [SID1234519901]).

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Group sales increase 5%1 at constant exchange rates and in Swiss francs
Pharmaceuticals Division sales up 5%, driven mainly by Tecentriq, Ocrevus and Perjeta
Diagnostics Division sales grow 5%, primarily due to immunodiagnostics
Core earnings per share growing ahead of sales at 6%

In the second quarter, the US FDA approves Tecentriq for certain people with metastatic urothelial carcinoma, Rituxan Hycela for subcutaneous injection, Actemra/RoActemra for giant cell arteritis and Lucentis for diabetic retinopathy

In July, the European CHMP recommends EU approval for Tecentriq in a specific type of metastatic lung and two types of metastatic bladder cancer. Further, CHMP recommends EU approvals of Actemra/RoActemra for the treatment of giant cell arteritis as well as Gazyvaro for people with previously untreated advanced follicular lymphoma
Outlook for 2017 raised

Commenting on the Group’s results, Roche CEO Severin Schwan said: "In the first half of the year, both our Pharmaceuticals and Diagnostics Divisions showed strong performance, very much driven by new product launches.

Particularly pleasing is the very successful launch of Ocrevus for the treatment of two forms of multiple sclerosis.

Based on our half-year performance, we raised the outlook for the full-year to mid-single digit sales growth."

Group results
Strong performance in both divisions
In the first half of 2017, Group sales rose 5% to CHF 26.3 billion. Core EPS grew 6%, ahead of sales. Core EPS growth reflects the strong underlying business performance. IFRS net income increased 2%.

Sales in the Pharmaceuticals Division increased 5% to CHF 20.5 billion. The recently launched medicines Tecentriq, Ocrevus and Alecensa contributed CHF 0.5 billion of new sales, which represents half of the division’s growth. Perjeta continued its strong sales increase. This growth was partially offset by lower sales of Tarceva, Tamiflu and Pegasys. In the US, sales advanced 8%, led by Tecentriq, Xolair, MabThera/Rituxan and Ocrevus, recently launched for the treatment of relapsing and primary progressive forms of multiple sclerosis. In Europe, sales were stable. Growth of Perjeta and Actemra/RoActemra sales was offset by lower sales of Avastin. In the International region, sales grew by 5%, led by the Latin America and Asia–Pacific subregions. In Japan, sales were stable. Growth of Alecensa sales (+42%) was partially offset by Avastin (-3%), which was negatively affected by the biannual government price cuts in April 2016.

Diagnostics Division sales increased 5% to CHF 5.8 billion. Centralised and Point of Care Solutions (+8%) was the main contributor, led by the growth of its immunodiagnostics business (+13%). In regional terms, growth was driven in particular by Asia–Pacific (+13%), with continued strong growth in China (+20%). Sales increased 3% in EMEA2, 8% in Latin America, 1% in North America, and 2% in Japan.

Core operating profit increased by 3% in the Pharmaceuticals Division and by 5% in the Diagnostics Division. The growth rates of both divisions were impacted by the base effect of income in 2016 from changes to the Group’s Swiss pension plans, partially offset by income from older medicine divestments in the first half of 2017.

Core EPS increased by 6% and net income on an IFRS basis increased by 2%. IFRS net income was impacted by impairments of intangible assets. These increased by CHF 0.7 billion net of taxes, notably from the partial impairment of the Esbriet product intangible.

Important new product approvals in Pharmaceuticals
In the second quarter of this year health authorities approved several new medicines: In April, Tecentriq received accelerated approval from the US Food and Drug Administration (FDA) for the treatment of people with locally advanced or metastatic urothelial carcinoma who are not eligible for cisplatin chemotherapy. In the same month, Lucentis was approved by the FDA for the monthly treatment of all forms of diabetic retinopathy. In May, Actemra/RoActemra subcutaneous injection was approved by the FDA for the treatment of giant cell arteritis. This is a chronic and severe autoimmune condition that has not seen any new treatments in more than 50 years. In June, the FDA approved Rituxan Hycela (rituximab and hyaluronidase human) for subcutaneous injection, for the treatment of adults with specific forms of blood cancer. This new formulation combines the monoclonal antibody used in intravenous MabThera/Rituxan with hyaluronidase, an enzyme that enables injection of the medicine under the skin. Also in June, a new tablet formulation of Esbriet was approved by the European Commission for the treatment of mild to moderate idiopathic pulmonary fibrosis (IPF), following approval by the FDA in early 2017. In July, the Australian Therapeutic Goods Administration approved Ocrevus for the treatment of relapsing forms of multiple sclerosis (RMS) and primary progressive multiple sclerosis (PPMS).

Clinical trial results support Roche medicines
The primary analysis of the phase III Haven 1 study in adults and adolescents and interim analysis of the phase III Haven 2 study showed positive data. The studies evaluated once-weekly subcutaneous emicizumab prophylaxis for the treatment of adults and adolescents or children with haemophilia A and inhibitors to factor VIII. The primary endpoint was treated bleeds, and results showed a statistically significant and clinically meaningful reduction in bleed rate of 87% (Haven 1) with emicizumab prophylaxis compared with on-demand treatment with bypassing agents.3
New data from additional analyses of the pivotal phase III Gallium study in people with previously untreated follicular lymphoma confirmed that the improvement in progression-free survival (PFS) with Gazyva/Gazyvaro-based treatment over MabThera/Rituxan-based treatment was sustained, irrespective of chemotherapy regimen.4 This updated analysis includes a further six months of follow-up.

Data presented at EAN5 showed Ocrevus significantly reduced disease activity and disability progression in patients with RMS and PPMS, as measured by No Evidence of Progression or Active Disease (NEPAD), a novel composite endpoint in MS. Ocrevus significantly reduced the risk of RMS and PPMS patients requiring mobility aids versus comparators. In patients with PPMS, Ocrevus reduced the risk of more severe forms of disability progression versus placebo.

The phase III Aphinity study showed adjuvant (after surgery) treatment with the combination of Perjeta, Herceptin and chemotherapy (the Perjeta-based regimen) significantly reduced the risk of breast cancer recurrence or death in people with HER2-positive early breast cancer compared to Herceptin and chemotherapy alone.6,7 At the time of the primary analysis, with median follow-up of 45.4 months, the reduction in risk of invasive breast cancer recurrence with the Perjeta-based regimen was greatest in people with lymph node-positive or hormone receptor-negative disease.

The phase III Alex study showed Alecensa reduced the risk of disease worsening or death (progression-free survival, PFS) by more than half (53%) compared to crizotinib when given as initial (first-line) treatment for people with anaplastic lymphoma kinase (ALK)-positive advanced non-small cell lung cancer (NSCLC).8

Clinical study updates
The phase III IMvigor211 study that evaluated Tecentriq in people with locally advanced or metastatic urothelial cancer whose disease progressed during or after treatment with a platinum-based chemotherapy (previously treated) did not meet its primary endpoint of overall survival compared to chemotherapy. The results observed in people treated with Tecentriq in IMvigor211 were generally consistent with those observed in a similar group of people in the Phase II IMvigor210 study.

In July, the EU Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for Tecentriq as a monotherapy for the treatment of adults with locally advanced or metastatic NSCLC after they have been previously treated with chemotherapy. People with EGFR activating mutations or ALK positive tumour mutations should also have received targeted therapy before receiving Tecentriq. This positive recommendation is based on results from the large randomised phase III Oak study and the randomised phase II Poplar study. The CHMP also adopted a positive opinion for the use of Tecentriq as a monotherapy for the treatment of adults with locally advanced or metastatic urothelial carcinoma who have been previously treated with a platinum based chemotherapy or who are considered ineligible for cisplatin chemotherapy. This positive opinion is based on results from the randomised phase III IMvigor211 study and cohorts 1 and 2 from the single-arm phase II IMvigor210 study.

New generation of diagnostics products
The cobas MRSA/SA nucleic acid test for use on the cobas Liat System for the qualitative detection and differentiation of methicillin-resistant Staphylococcus aureus (MRSA) and Staphylococcus aureus (SA) is now available in countries accepting the CE mark and ideal for use at the point of care. This menu expansion serves specific needs of European markets. This is the first real-time PCR test that simultaneously detects MRSA and SA with one sample in less than 30 minutes. MRSA and SA are both significant sources of healthcare- and community-associated infections.
Also introduced to the markets were the Avenio ctDNA (ctDNA – circulating tumour DNA) analysis kits for oncology research. These are the first blood-based distributed oncology tests and provide accurate insights into different stages and types of cancer. They represent a portfolio of three next-generation sequencing (NGS) liquid biopsy assay kits for oncology research: the Avenio ctDNA Targeted Kit, Expanded Kit and Surveillance Kit. The kits include all reagents, bioinformatics and software to make ctDNA-testing accessible to all NGS laboratories.

Roche launched the Avenio Millisect System, which utilises an automated, digitally assisted process to reliably and efficiently isolate clinically relevant cells from tissue biopsies for diagnostic testing in the US and countries accepting the CE mark. It allows for efficient tissue dissection and maximises medical value for all molecular downstream
applications.

The Elecsys HIV combi PT assay was approved by the FDA. This highly sensitive and specific assay further expands Roche’s broad testing menu for infectious diseases in the US. With the addition of this assay, laboratories will be able to screen for common co-infections, such as hepatitis C and syphilis, which can be tested simultaneously with HIV, reducing the need for sample splitting and additional analysers. The FDA also granted approval for the cobas CMV (cytomegalovirus) test for use on the fully automated cobas 6800 and cobas 8800 systems. Healthcare professionals use the CMV test to assess how transplant patients on therapy are responding to treatment.