AstraZeneca hikes full-year forecast as Nexium holds its own, Brilinta delivers

AstraZeneca ($AZN) has so far weathered the Nexium patent cliff well enough to actually raise its full-year sales forecast for 2015. Its Brilinta growth strategy appears to be paying off. But the U.K.-based company faces another big hurdle in the advent of Crestor generics--and investors aren't letting up on the pressure.

The company posted third-quarter results about in line with analyst expectations, at $5.95 billion in revenue, a 10% decline year over year. Earnings per share were down by 2% to $1.03. But that's including the effects of a strong dollar, which has walloped the entire pharma industry this year; in constant currencies, EPS was up slightly, and revenue holding its own with last year.

Those numbers prompted AstraZeneca to say its full-year sales growth would be roughly flat, instead of a single-digit percentage decline as previously expected.

It helps that Nexium is holding onto more sales than expected in the face of generic competition; its contribution shrank by 30% in Q3 to $641 million, or 24% in constant currencies; analysts had expected a 41% drop. The company has been fighting those generics on multiple fronts, including a recent trademark-infringement lawsuit over a copycat version's purple-tinted pill. The drug went off patent last year, but manufacturing problems at would-be generics makers delayed copycat versions until the first quarter of this year. Several more versions are expected to hit the market, eroding sales further.

AstraZeneca CEO Pascal Soriot

So, of course, AZ can't expect growth from the Nexium franchise; that's the job of CEO Pascal Soriot's designated "growth platforms," which include the blood thinner Brilinta. Thanks to a new approval for broader use, the drug took a big jump in Q3 with a 48% increase in sales to $170 million, bringing the year's tally to $445 million. On the diabetes front, its SGLT2 drug Farxiga saw its sales double to $135 million. And China--one of the emerging markets AstraZeneca is counting on for growth--managed an 11% increase. That's about half of its growth in that market last year, but better than several of its Big Pharma peers have managed as the economy there slows down.

"We are working as hard and as fast as we can to fill this gap created by the loss of Crestor and Nexium," he said, after announcing third-quarter results that were broadly in line with expectations.

Soriot called 2016 "a pivotal year in our strategic journey" thanks to the loss of exclusivity on Crestor in the U.S. Besides pushing its growth platforms and prepping for a few hoped-for drug launches, the company plans an "increasing focus on costs" to keep earnings coming.

Meanwhile, some of AstraZeneca's late-stage meds will have their work cut out for them. For instance, its cancer immunotherapy likely won't make an appearance on the market till after 2017, Bernstein analyst Tim Anderson pointed out, putting it several years behind current contenders from Merck ($MRK) and Bristol-Myers Squibb ($BMY). A nearer-term product, the gout candidate lesinurad, could win FDA approval by the end of the year, but some safety worries and a dearth of clear-benefit evidence could trip it up in the marketplace.

Other pipeline candidates have failed to deliver altogether; safety questions arose around its IL-17 psoriasis prospect brodalumab, prompting AZ to sell it off to Valeant Pharmaceuticals ($VRX).

- see the release from AZ
- get the company's slide presentation

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