Tagrisso, Imfinzi come to AstraZeneca's rescue as China growth slows on Pulmicort drag

Industry watchers who hoped AstraZeneca would stand out from its pharma peers by posting a strong quarter during the pandemic might be disappointed. Although its oncology franchise remained in the growth fast lane, its respiratory business suffered thanks to China, where the company has historically enjoyed stellar performances.

During the third quarter, EGFR lung cancer drug Tagrisso brought in sales of $1.16 billion after seeing enviable 30% year-over-year growth, topping analysts’ expectations by 3%.

PD-L1 inhibitor Imfinzi also delivered 29% growth over the same period last year to reach $533 million, driven by its new FDA small cell lung cancer nod as well as global use expansion.

But when it came down to total product sales, AZ only chalked up an increase of 6% in Q3, or 7% after adjusting for foreign exchange rates. The main factor behind the slowdown? Old corticosteroid Pulmicort, especially in China.

Similar to what AZ saw in Q2, Pulmicort sales—the majority of which come from China—plummeted 55% year over year to $151 million in Q3, missing consensus estimates by 12%. The drug was such a drag that without it, AZ would have grown sales by 10% at constant currencies.

The sharp decline was caused by COVID-19, as children didn’t go to nebulization rooms to get the drug, AZ said. But the company saw a slow but progressive recovery toward the end of the quarter that it expects to extend into Q4, CEO Pascal Soriot said during a call on Thursday.

To be fair, AZ’s China portfolio outside of Pulmicort remains strong, with sales increasing by 25% in Q3. Tagrisso’s emerging market sales hit $950 million through the first nine months of the year as a result of 72% year-over-year growth, mainly driven by its admission to China’s National Reimbursement Drug List (NRDL).

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This year, AZ is applying for next year’s NRDL listing for six to seven new drugs, Leon Wang, the company’s international markets chief, told investors on the call. Major price cuts will be inevitable, “but AstraZeneca has very good [marketing] coverage and solid No. 1 position in China,” he said.

“We will definitely be able to scale up volume much faster than the other companies in China,” he added.

Wang acknowledged that the 30% to 40% kind of growth AZ enjoyed in China last year won’t happen again in 2021, but the low- to mid-teen range will be attainable.

Besides Tagrisso and Imfinzi, Merck-shared PARP inhibitor Lynparza also shone during Q3. Its sales jumped 42% for the three months to $464 million as its U.S. launches in prostate cancer and first-line HRD-positive ovarian cancer regardless of BRCA mutation status started to take shape. Those two indications were simultaneously greenlit in the EU on Thursday.

Farxiga represents another bright spot, with a $525 million Q3 haul that marked a 32% year-over-year jump and came in 10% above Wall Street’s estimates. The drug has been on a roll of adding new indications. Originally developed as a Type 2 diabetes therapy, the SGLT2 inhibitor in May won FDA clearance to reduce the risk of cardiovascular death or hospitalization in heart failure patients with a reduced ejection fraction, or HFrEF. And just last month, it nabbed an FDA breakthrough therapy designation for chronic kidney disease after showing it could reduce related death by 39% over placebo. AZ plans to file for approval by year-end.

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Of course, the world’s attention on AZ these days is focused on its University of Oxford-partnered COVID-19 vaccine, AZD1222. After an initial clinical hold in September due to a report of a serious neurologic disease in a U.K. trial participant, AZ has now resumed dosing at all trial sites, with enrollment now at about 23,000, Mene Pangalos, AZ’s biopharmaceuticals R&D chief, said on the call. The company’s gearing up to report phase 3 data by the end of the year.

Overall, AZ’s Q3 sales checked in at $6.52 billion, in line with analysts’ projections. The company maintained its full-year guidance, with total revenues—including collaboration revenues from Lynparza, Daiichi Sankyo-shared Enhertu and FibroGen-partnered roxadustat—to show high single-digit to low double-digit growth.