AstraZeneca's Farxiga hits $1B quarterly mark, but flagship oncology and China units lag

For AstraZeneca, historically known for its strong oncology portfolio, it was metabolic and heart disease drug Farxiga that stole the show at the beginning of 2022.

After delivering revenue growth of 67% year-over-year, Farxiga reached $1 billion in quarterly sales for the first time during the first three months of 2022. The haul handily beat Wall Street’s expectations by 20%, according to SVB Securities.

The SGLT2 inhibitor experienced strong demand across its indications in Type 2 diabetes, heart failure and chronic kidney disease, AstraZeneca said. It also benefited from recent guideline updates from cardiology societies.

Farxiga snagged its FDA nod to treat chronic kidney disease (CKD) patients regardless of their diabetic status a year ago. Johnson & Johnson’s rival SGLT2, Invokana, boasts an approval only in diabetic kidney disease.

In markets where AZ has launched Farxiga in CKD, the drug has captured market share of between 70% and 90%, Ruud Dobber, AZ’s biopharmaceuticals business head, told investors during a call Friday.

But Eli Lilly and Boehringer Ingelheim aren’t far behind with their SGLT2 offering Jardiance, having posted a phase 3 win in CKD last month. Still, the CKD market remains underdeveloped with significant upside for more than one agent to grow, Dobber said.

As for heart failure, where Farxiga is already duking it out against Jardiance, the two meds are splitting the U.S. market roughly 50-50, Dobber said. In several ex-U.S. territories, Fraxiga is leading the way thanks to an earlier-to-market advantage, he added.

In a bid to reach more patients, Lilly and BI's Jardiance recently jumped ahead of Farxiga with an FDA nod in February to treat heart failure patients regardless of left ventricular ejection fraction.

As for Farxiga, currently approved for heart failure with reduced ejection fraction, AZ expects a readout from the phase 3 Deliver trial by June to potentially expand into heart failure with preserved ejection fraction.

Farxiga’s landmark first-quarter showing comes in contrast to a disappointment from AZ’s leading oncology portfolio, which represents about a third of the company’s sales.

EGFR lung cancer med Tagrisso delivered $1.3 billion in sales in the first quarter, in line with Wall Street consensus though 1% below its fourth-quarter haul. U.S. sales of Tagrisso came in at $439 million, which marked a 10% step down from the previous three months ended in December.

A weaker first quarter was expected for Tagrisso, Dave Fredrickson, AZ’s oncology business chief, said on the call. Tagrisso suffered from a gross-to-net price adjustment in the U.S., which is “typically seen at the beginning of the year as Medicare and commercial plans reset,” he said. And COVID-19 continued to hurt diagnosis and testing rates in lung cancer, which remained at around 5% to 15% below baseline, according to AZ.

Meanwhile, the net price pressure also slowed AZ’s Merck-partnered Lynparza. The PARP inhibitor’s first-quarter sales, at $617 million, came 5% below consensus.

What's more, the recent surge in COVID cases impacted PD-L1 inhibitor Imfinzi, an infused therapy, as its $599 million sales were 7% below expectations.

Another notable weak spot in AZ’s first quarter—and likely for the entire year by the British pharma’s estimate—is China. Thanks to pricing pressure, the once fast-growing emerging market saw sales drop 8% at constant currencies for AZ. The company expects a mid-single-digit percentage decline from the country for the full year.

Tightened anti-COVID measures in China, including the ongoing lockdown in Shanghai, raise questions of whether the drugmaker can meet its already reduced guidance in the country.

The lockdown creates a “short-term disruption” to AZ’s local supply chain in China and imports, Leon Wang, AZ’s international markets head, told investors during the call.

Wang called 2022 “the most difficult year” for AZ’s China business because of headwinds from all directions. Still, the company is sticking to the China outlook and expects Forxiga—the ex-U.S. name for Farxiga—Tagrisso and newly launched three-in-one chronic obstructive pulmonary disease inhaler Breztri to drive growth for the business partly because these drugs don’t require administration at a healthcare facility.

All considered, AZ’s first-quarter revenues jumped 60% to $11.4 billion. The newly acquired Alexion rare disease franchise contributed $1.7 billion. COVID-19 vaccine Vaxzevria added $1.1 billion and COVID antibody Evusheld reeled in $469 million.

As AZ noted, it’s now delivering already contracted Vaxzevria doses through the second quarter and expects sales from the COVID shot to wind down for the latter half of 2022. Nevertheless, increased demand for Evusheld could compensate for the gap, AZ figures.