After AstraZeneca’s recent acquisitions of various technologies across different therapeutic areas, some investors started to wonder if the British pharma is stretching too thin.
To hear CEO Pascal Soriot explain it, the deals were made to build the company’s future.
“This portfolio actually gives us the opportunity to combine,” Soriot said on the company’s first-quarter earnings call.
In oncology, AZ last month unveiled a $2 billion deal to acquire targeted radiotherapy specialist Fusion Pharmaceuticals. It followed a $1 billion buyout unveiled in December for the cell therapy biotech Gracell Biotechnologies. These add to AZ’s existing checkpoint inhibitor offerings and antibody-drug conjugate capabilities as well as an emerging portfolio of bispecific antibodies.
In the cardiovascular and metabolic disease field, AZ in November said it would pay $185 million upfront to in-license an oral GLP-1 agonist from Eccogene. AZ has said the drug may hold potential for combinations including with its SGLT2 agent Farxiga.
As for vaccines, AZ in December entered into an agreement to acquire Icosavax, which has a protein virus-like particle platform and a phase 3-ready RSV vaccine candidate.
“I think there’s sometimes a misperception of what we’re trying to do,” Pascal said. “We’re not trying to build a vaccine business like vaccine companies have. We are actually targeting vaccines that will be […] synergistic to oncology or respiratory disease products.”
With that synergy strategy, Soriot argued that the company is not stretching too thin.
“The challenge and the opportunity in our industry is always to be able to think about today, but also the long term,” the chief executive said.
But M&A activities—at least in terms of technology platform deals—will slow down at AZ, Soriot added.
“I think we have acquired and built most of what we need for now and we need to execute on what we’ve got,” Soriot said. “But it doesn’t mean of course BD will come down to zero.”
Soriot’s comment comes as AstraZeneca delivered a strong start to 2024 as both oncology and biopharmaceutical divisions surpassed $5 billion quarterly sales for the first time and rare disease crossed the $2 billion mark. In a Thursday note to clients, ODDO BHF analysts called the results “much stronger than expected.”
AZ’s total revenue, which includes both product sales and alliance revenue, beat analysts’ estimates by 7%, reaching $12.7 billion in the first quarter.
The stellar performance was surprisingly driven in a large part by the 10-year-old Farxiga. As it nears a mandated price cut under the Inflation Reduction Act, the SGLT2 inhibitor brought in $1.89 billion sales. The number marked a 45% growth year over year and handily beat Wall Street’s consensus projection by 19%, according to ODDO BHF.
The launch of an authorized generic in the U.S. helped fuel Farxiga’s jump because it offers a low-cost option for patients, the company’s biopharmaceuticals chief Ruud Dobber told investors during a call Thursday. Dobber declined to offer a sales breakdown between the two versions of Farxiga.
While Farxiga saw “solid growth” in emerging markets despite generic competition in some countries, Dobber warned that the drug is expected to be included in China’s volume-based procurement program later this year. The Chinese initiative, which targets off-patent drugs, will mean price cut and likely market share loss.
Still, investors have most of their attention on some newer drugs, including in the oncology department.
HER2-targeted Enhertu generated $879 million sales in the first quarter between AZ and its partner Daiichi Sankyo. The antibody-drug conjugate enjoyed “sequential market share growth” in HER2-positive metastatic breast cancer and “continued adoption” in HER2-low disease, AZ’s oncology business head Dave Fredrickson said on the call.
AZ and Daiichi expect to report data from the DESTINY-Breast06 trial by June, which could move Enhertu one line earlier into second-line HER2-low breast cancer and potentially in patients with even lower expression of HER2 than the current HER2-low definition. The trial has already reached primary completion about a month ago, which means the data necessary for the primary endpoint analysis were all in.
In oncology, Tagrisso remained the biggest drug with nearly $1.6 billion in sales in the first quarter, good for 15% growth year over year at unchanged exchange rates. The EGFR inhibitor looks on track to reach patients with unresectable stage 3, EGFR-mutant non-small cell lung cancer after a recent phase 3 trial win.