Tagrisso, other cancer drugs hand AstraZeneca one of pharma's rare pandemic sales gains

Against the backdrop of several pharma companies reporting second-quarter sales declines due to COVID-19, AstraZeneca represents a rare exception, thanks to a strong performance by its oncology medicines.

In the second quarter, AZ’s oncology portfolio brought in $2.61 billion, up 24% year-over-year at constant exchange changes. Key drugs, including lung cancer med Tagrisso, Merck & Co.-partnered PARP inhibitor Lynparza, PD-L1 blocker Imfinzi and blood cancer therapy Calquence all came in above industry watchers’ expectations.

AZ’s top-selling drug, EGFR TKI Tagrisso, still managed to grow to $1.03 billion in Q2 despite negative inventory shifts, according to the company.

Imfinzi’s $492 million quarterly haul also marked a 6.5% increase over Q1, thanks in part to a small cell lung cancer nod the FDA doled out in late March. And AZ attributed Lynparza’s 52% year-over-year jump, to $419 million, to a recent FDA green light in first-line maintenance treatment of HRD-positive ovarian cancer, regardless of BRCA mutation status.

The cancer drugs’ stellar performance came in stark contrast to an 8% decline in AZ’s respiratory department. That was mainly the doing of old corticosteroid Pulmicort, which saw sales plummet by a whopping 70% to merely $97 million in Q2, leaving a huge 70% discrepancy between the reported number and the Street’s forecast.

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The reason for the sharp decline? China, the drug’s main source of revenue. The COVID-19 pandemic significantly reduced the number of patients visiting nebulizer centers and “an unusually benign influenza season ... significantly reduced [the number of] asthma exacerbations,” CEO Pascal Soriot said during a conference call on Thursday.

That slide in turn dragged down AZ’s China sales growth to 11% in Q2 at constant currencies, below the 17% the country delivered for the drugmaker in Q1.

China now makes up about one-fifth of AZ’s entire business and has been faithfully delivering double-digit sales growth even amid COVID-19-related slowdowns. But recent political tensions between U.S. and China—which are AstraZeneca’s top and second-largest markets, respectively—cloud over the British pharma’s future.

Right now, AZ seems to be handling the situation with ease, rubbing shoulders with both sides. The company’s University of Oxford-partnered COVID-19 vaccine candidate, AZD1222, was the only non-U.S. program picked by the Trump administration as part of its Operation Warp Speed initiative. And just a few days ago, Leon Wang, AZ’s head of international markets, was the only foreign pharma executive to attend an entrepreneur meeting chaired by Chinese President Xi Jinping.

“We always said we’re in China … not only be there as an office but basically be integrated in China,” Soriot told reporters on Thursday, pointing to AZ’s manufacturing footprint, R&D efforts and digital health collaborations in the country.

“AstraZeneca has always been a good example of China’s opening-up policy and welcoming investment from [other parts] of the world,” Wang added. “We’re more perceived like a local-rooted foreign company rather than a totally foreign company.”

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That said, China is a noticeable missing element in AZ’s COVID-19 vaccine project. So far, the company has signed supply deals with the U.S. (300 million doses), the U.K. (100 million doses) and the EU (400 million doses), plus a manufacturing and distribution agreement with R-Pharm in Russia, and with the Serum Institute of India to provide the shot to low-income countries. And it’s in discussions with Japan, Brazil and South Korea for potential introduction of the vaccine into those markets should the phase 3 efficacy trial turn out successful.

So far, AZ has set up a global supply chain that’s able to make 2 billion doses by the end of 2021, and it's “working on producing more if necessary,” Soriot said. He declined to provide a price for the vaccine after the pandemic, saying it’s still too early.

Overall, AZ’s second-quarter product sales increased 9% at constant currencies, and the $6.05 billion haul checked in 1% ahead of consensus. Total revenues, which include profit share from Daiichi Sankyo-paired antibody-drug conjugate Enhertu and FibroGen-partnered anemia med roxadustat, were $6.28 billion in the quarter. The company maintained its full-year guidance, expecting total revenue to grow by a high-single- to low-double-digit percentage.