Original Source: FD (FAIR DISCLOSURE) WIRE
. Jonathan Hunt, AstraZeneca PLC, IRO . David Brennan, AstraZeneca PLC, CEO . Paul Kenyon, AstraZeneca PLC, Group Financial Controller
. Ed Seage, AstraZeneca PLC, USA IR . John Patterson, AstraZeneca PLC, Executive Director Development . Alexandra Hauber, Bear Stearns, Analyst . Mark Purcell, Deutsche Bank, Analyst . Paul Mann, Morgan Stanley, Analyst . Lars Hevreng, Enskilda, Analyst . Jo Walton, Lehman Brothers, Analyst . Steve Scala, Cowen & Co, Analyst . Tim Anderson, Sanford C. Bernstein & Co. Inc., Analyst . Chris Schott, Bank of America, Analyst . Michael Leacock, ABN Amro Holdings, Analyst
. Louisa Hector, Lehman Brothers, Analyst . Andrew Baum, Morgan Stanley, Analyst
Co. announced 3Q07 sales of $7.15b and reported EPS of $0.91. Mgt. expects 2007 EPS to be $3.98-4.13 including Toprol XL but excluding restructuring costs.
A. Key Data From Call 1. 3Q07 sales = $7.15b 2. 3Q07 reported EPS = $0.91 3. 3Q07 GM = 79.8% 4. Gross debt at qtr.-end = $14.3b 5. 3Q07 YTD net share repurchases = $3.1b 6. 2007 EPS guidance = $3.98-4.13 excluding restructuring costs
S1. Business Overview (D.B.) 1. 3Q07 Overview: 1. Continued progress on key strategic priorities. 2. On track to meet full-year earnings target, despite challenging market conditions. 3. Executing comprehensive plan to drive productivity and efficiency; seeing results from those initiatives. 4. Taking steps to strengthen pipeline; highest priority. 1. Two additional compounds progressing to Phase III development: 1. PN400. 2. Crestor Abbott fenofibrate fixed-dose combination. 2. Brings total number of late-stage projects to ten. 3. Breadth, depth of portfolio stronger now than ever. 5. Plan to be major force in biologics coming to life through creation of new MedImmune, where transition been underway.
1. Combination of MedImmune, CAT and existing AZN biologics assets has positioned co. to be world leader in this area in future.
2. 3Q07 Performance Highlights: 1. Sales: $7.15b, 10% increase as reported and 6% increase on constant currency basis. 2. Faces generic competition across entire dosage range for Toprol-XL in U.S. beginning in Aug. 3. Excluding Toprol-XL, sales up 9%, 2% from MedImmune. 4. Sales in U.S. up 3%, affected by Toprol-XL.
5. Sales in rest of world up 9%. 6. Operating profit down 7% at constant currency, reduced by: 1. $146m of restructuring costs.
2. $212m from inclusion of MedImmune, due to expected seasonal
trading loss, amortization of intangible assets and some one-off costs relating to post-acquisition pipeline rationalization. 7. Reported EPS: $0.91, down 13%. 8. Core EPS, which adjusts for MedImmune and Merck-related amortization and restructuring costs, down 2%. 1. Reflects previously mentioned operating loss in MedImmune,
net interest expense associated with financing acquisition. 2. Toprol-XL also had impact. 9. Same factors at work, with restructuring costs playing more prominent role, in YTD performance. 3. Nexium: 1. PPI market challenging. 2. Sales down 1% to just under $1.3b. 3. Outside U.S., sales up 3% with strong growth in emerging markets offsetting decline in Western Europe. 4. Sales in U.S. down 3%. 5. Continues growing market share within branded PPI segment, but isn't enough to offset lower prices and growth of generic esomeprazole. 6. 4Q07 will present difficult YonY comparison, as benefit from release of balance sheet provision related to TRICARE in U.S. realized in 4Q06.
1. Provision around $100m, about half related to Nexium. 7. Expects worldwide sales slightly down for full-year. 4. Crestor:
1. Sales up 25% to $691m. 2. U.S. sales up 14% to $342m.
3. Prescriptions in U.S. statin market up 7% QoverQ. 1. Crestor prescriptions up 15%. 4. Market share steady at 8.6% of total prescriptions in Sept., in face of nearly 6.5 share point gain for generic
simvastatin. 5. Strong performance in markets outside U.S. with sales up 40%. 1. These markets now account for half of Crestor's sales, continuing source of growth for brand. 1. Over 20% share by volume in Canada and Italy. 2. Almost 15% share in France. 3. Japan already over 7% share. 5. Arimidex: 1. Sales up 7% to $425m on 7% growth in U.S., 8% in rest of world. 6. Seroquel:
1. First $1b qtr., with sales up 22%. 2. Prescriptions in U.S. up 10% through Sept. YTD, twice market growth. 3. Sales in U.S. up 24% in qtr. to $760m; includes around $80m in launched stocks for new Seroquel XR dosage. 4. Full promotional rollout for XR began 08/20/07. 1. Well-placed on formularies in Medicaid, Medicare and in commercial managed care. 5. Strategy: use Seroquel XR to continue growth of total franchise, not to drive accelerated switch of established patients from immediate release product to sustained release regimen. 1. Seroquel XR: only labeled for schizophrenia indication. 2. Some patients will switch; for others, continuity of remaining on stable two or three times per day regimen that's already working may be more important than convenience of once-daily dosage. 3. Aims to make Seroquel XR preferred choice for new patient starts in schizophrenia and then drive growth as builds out full complement of indications for XR that IR formulation
currently enjoys, including bipolar mania and depression and entirely new indications in major depression and generalized anxiety disorder that will be unique to XR formulation. 4. Over time, Seroquel XR should become large portion of total and bigger Seroquel franchise.
7. Symbicort: 1. Sales up 25% to $371m. 2. In Europe, growth fueled by increased usage in COPD and market share gains in asthma, where Symbicort smart regimen having positive impact.
3. Launched Symbicort in U.S. at end of June to specialists and
month later to primary care segment. 1. Some two months before normal seasonal uptick in asthma prescriptions begins.
2. Launch progressing to plan; early indicators are: 1. Rate of trial and usage by specialists; among target audience of allergists, half have already prescribed Symbicort and third of pulmonary specialists have also done so. 2. New prescription share already 10% among these specialist prescribers. 4. In market as whole, Symbicort's share of patients newly started on fixed combination treatment: 9.8% in latest week. 1. Translates into overall new prescription share of 4.6%. 5. Good performance in rest of world combined with U.S. launch that's on track.
S2. 3Q07 Financial Review (P.K.) 1. 3Q07 P&L: 1. GM: 79.8%, 1.3 points higher than last year. 1. During qtr., inclusion of restructuring costs, MedImmune and higher royalty payments depressed margin, while currency and lower contingent payments to Merck had positive impact.
2. Stripping out those impacts, underlying GM improved by 0.5
point on continuing operational efficiencies. 2. R&D increased 32% in constant currency. 1. Excluding restructuring costs and inclusion of MedImmune, underlying increase 14%. 3. SG&A increased 10% vs. 3Q06 in constant currency terms. 1. On like-for-like basis, stripping out restructuring costs and MedImmune, SG&A 3% lower vs. 3Q06 on continued cost discipline. 4. Operating profit down 7%; reported profits impacted by: 1. $212m operating loss in MedImmune, reflecting expected seasonality. 2. Acquisition-related amortization. 3. One-off charges related to post-acquisition pipeline rationalization. 4. Restructuring costs of $146m …