AstraZeneca
9 February 2023 07:00 GMT
Full year and Q4 2022 results
Strong performance and pipeline progress in 2022 underpins 2023 outlook
On track to deliver industry-leading revenue growth through 2025 and beyond
Revenue and EPS summary
| FY 2022 | Q4 2022 | ||||||
| % Change | % Change | ||||||
| $m | Actual | CER[1] | $m | Actual | CER | ||
| – Product Sales | 42,998 | 18 | 24 | 10,798 | (6) | 2 | |
| – Collaboration Revenue | 1,353 | 54 | 56 | 409 | (20) | (19) | |
| Total Revenue | 44,351 | 19 | 25 | 11,207 | (7) | 1 | |
| Reported[2] EPS [3] | $2.12 | n/m | n/m | $0.58 | n/m | n/m | |
| Core[4] EPS | $6.66 | 26 | 33 | $1.38 | (17) | (5) |
Financial performance (FY 2022 figures unless otherwise stated , growth numbers and commentary at CER)
‒ Total Revenue increased 25% to $44,351m, with growth coming from all therapy areas, and from the addition of Alexion, which was incorporated into the Group’s results from 21 July 2021
‒ Total Revenue in the fourth quarter was impacted by the decline in Vaxzevria. Excluding Vaxzevria, Total Revenue in the quarter increased 17%
‒ Oncology Total Revenue including milestone receipts increased 20%; Oncology Product Sales increased 19%. Total Revenue CVRM[5] increased 19%[6], R&I[7] increased 3%, and Rare Disease increased 10%6
‒ Core Gross Margin of 80%, up six percentage points, reflecting the lower revenue from Vaxzevria and the increased share of Oncology and Rare Disease medicines. Core Gross Margin of 77% in the fourth quarter was impacted by inventory write downs and manufacturing termination fees for Evusheld
‒ Core Total Operating Expense increased 23%, reflecting the addition of Alexion, and continued investment in new launches and the pipeline to deliver sustainable long-term growth
‒ Core Operating Margin of 30%, up four percentage points
‒ Core EPS increased 33% to $6.66. Second interim dividend declared of $1.97 per share, making a total dividend declared for FY 2022 of $2.90 for the year. The Core Tax Rate for the year was 17%, reflecting IP incentive regimes, geographical mix of profits and adjustments to prior year tax liabilities
FY 2023 Guidance summary (Growth numbers at CER)
‒ Total Revenue is expected to increase by a low-to-mid single-digit percentage
‒ Total Revenue excluding COVID-19 medicines[8] is expected to increase by a low double-digit percentage
‒ Core EPS is expected to increase by a high single-digit to low double-digit percentage
Pascal Soriot, Chief Executive Officer, AstraZeneca, said:
“2022 was a year of continued strong company performance and execution of our long-term growth strategy . We made excellent pipeline progress with a record 34 approvals in major markets and we are initiating new late-stage trials for high potential medicines such as camizestrant, datopotamab deruxtecan and volrustomig.
In 2023, we expect to see another year of double-digit revenue growth at CER, excluding our COVID-19 medicines. We will continue to invest behind our pipeline and recent launches while continuing to improve profitability. We plan to initiate more than thirty Phase III trials this year, of which ten have the potential to deliver peak year sales over one billion dollars.
Our R&D success and revenue increase in 2022 demonstrate that we are on track to deliver industry-leading revenue growth through 2025 and beyond, and have set AstraZeneca on a path to deliver at least fifteen new medicines before the end of the decade.”
Key milestones achieved since the prior results
‒ Key regulatory approvals: US approval for Airsupra (PT027) in asthma. EU approvals for Lynparza[9] in mCRPC[10] (PROpel), Enhertu in gastric cancer (DESTINY-Gastric01) and HER2[11]-low breast cancer (DESTINY-Breast04), Imfinzi in biliary tract cancer (TOPAZ-1), Imfinzi+Imjudo in HCC[12] and Forxiga in heart failure with preserved ejection fraction. Five approvals in Japan, including Imfinzi and Imjudo in liver cancer (TOPAZ-1) and NSCLC[13] (POSEIDON) and Calquence for treatment-naïve CLL (ELEVATE-TN)
‒ Other regulatory milestones: US Fast Track designations for capivasertib in HR-positive HER2-negative breast cancer (CAPItello-291), tozorakimab in treatment/prevention of acute respiratory failure in patients with viral lung infection (TILIA), and Orpathys plus Tagrisso in NSCLC with MET[14] overexpression (SAVANNAH/SAFFRON); US Orphan Drug Designation for Saphnelo in idiopathic inflammatory myopathies; US Emergency Use Authorisation for Evusheld revised – as of January 2023, Evusheld is not currently authorised for use in the US.
Guidance
The Company provides guidance for FY 2023 at CER, based on the average exchange rates through 2022.
Total Revenue is expected to increase by a low-to-mid single-digit percentage
Excluding COVID-19 medicines, Total Revenue is expected to increase by a low double-digit percentage
Core EPS is expected to increase by a high single-digit to low double-digit percentage
‒ While challenging to forecast, Total Revenue from COVID-19 medicines (Vaxzevria, Evusheld and AZD3152, the COVID-19 LAAB[15] currently in development) is expected to decline significantly in FY 2023, with minimal revenue from Vaxzevria
‒ Total Revenue from China is expected to return to growth and increase by a low single-digit percentage in FY 2023
‒ Collaboration Revenue and Other Operating Income are both expected to increase, driven by continued growth of our partnered medicines, success-based milestones, and certain anticipated transactions
‒ Core Operating Expenses are expected to increase by a low-to-mid single-digit percentage, driven by investment in recent launches and the ungating of new trials
‒ The Core Tax Rate is expected to be between 18-22%
The Company is unable to provide guidance on a Reported basis because it cannot reliably forecast material elements of the Reported result, including any fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal settlement provisions. Please refer to the cautionary statements section regarding forward-looking statements at the end of this announcement.
Currency impact
If foreign exchange rates for February to December 2023 were to remain at the average rates seen in January 2023, it is anticipated that FY 2023 Total Revenue and FY 2023 Core EPS would both incur a low single-digit adverse impact versus the performance at CER.
The Company’s foreign exchange rate sensitivity analysis is provided in Table 17.
Table 1 : Key elements of Total Revenue performance in Q4 2022
| % Change |
| Revenue type | $m | Actual | CER | |||
| Product Sales | 10,798 | (6) | 2 | * Decline of 6% (2% increase at CER) due to lower sales of Vaxzevria[16]* Strong growth in Oncology, CVRM and Rare Disease | ||
| Collaboration Revenue | 409 | (20) | (19) | * $188m for Enhertu (Q4 2021: $60m)* $37m for Tezspire (Q4 2021: $nil)* Milestone of $105m for Lynparza | ||
| Total Revenue | 11,207 | (7) | 1 | * Excluding Vaxzevria, Q4 2022 Total Revenue increased by 8% (17% at CER) – see below | ||
| Therapy areas | $m | Actual | CER | |||
| Oncology | 4,046 | 4 | 12 | * Strong performance across key medicines and regions | ||
| CVRM 6 | 2,284 | 12 | 22 | * Farxiga up 39% (52% CER) , Lokelma up 50% (63% at CER), roxadustat up 61% (83% CER), Brilinta decreased 1% (increased 4% at CER) | ||
| R&I | 1,485 | (7) | (1) | * Growth in Fasenra, Breztri and Saphnelo offset by decline in Pulmicort of 33% (28% at CER) primarily due to the impact of VBP[17] implementation in China | ||
| V&I[18] | 1,163 | (50) | (43) | * $734m from Evusheld (Q4 2021: $135m)* $95m from Vaxzevria (Q4 2021: $1,762m) | ||
| Rare Disease 6 | 1,816 | 4 | 10 | * Ultomiris up 52% (62% at CER) as gMG launch and conversion progressed; offset by decline in Soliris* Strensiq up 24% (27% at CER) reflecting strength of patient demand and geographic expansion | ||
| Other Medicines | 412 | (2) | 12 | |||
| Total Revenue | 11,207 | (7) | 1 | |||
| Regions inc. Vaxzevria | $m | Actual | CER | |||
| Emerging Markets | 2,733 | (25) | (18) | * Decline due to lower sales of Vaxzevria (growth rates excluding Vaxzevria shown below) | ||
| – China | 1,194 | (9) | 3 | * Second consecutive quarter of growth at CER | ||
| – Ex-China Emerging Markets | 1,538 | (35) | (29) | * Decline due to lower sales of Vaxzevria | ||
| US | 4,788 | 22 | 22 | |||
| Europe | 2,308 | (20) | (8) | * Decline due to lower sales of Vaxzevria | ||
| Established RoW | 1,378 | (11) | 8 | |||
| Total Revenue inc. Vaxzevria | 11,207 | (7) | 1 | |||
| Regions exc. Vaxzevria | $m | Actual | CER | |||
| Emerging Markets | 2,678 | 7 | 18 | |||
| – China | 1,194 | (8) | 4 | * Second consecutive quarter of growth at CER | ||
| – Ex-China Emerging Markets | 1,484 | 24 | 33 | * Strong growth in Oncology and CVRM* $246m from Evusheld in Q4 (Q4 2021: $69m) | ||
| US | 4,788 | 24 | 24 | * Growth in Oncology medicines | ||
| Europe | 2,268 | (12) | 1 | |||
| Established RoW | 1,378 | 4 | 27 | |||
| Total Revenue exc. Vaxzevria | 11,112 | 8 | 17 |
Table 2 : Key elements of financial performance in Q4 2022
| Metric | Reported | Reported change | Core | Core change | Comments[19] | |
| Total Revenue | $11,207m | -7% Actual 1% CER | $11,207m | -7% Actual 1% CER | * Excluding Vaxzevria, Q4 2022 Total Revenue increased by 8% (17% at CER)* See Table 1 and the Total Revenue section of this document for further details | |
| Gross margin[20] | 73% | 13pp Actual 15pp CER | 77% | 3pp Actual 4pp CER | + Increasing mix of sales from Oncology and Rare Disease medicines+ Decreasing mix of Vaxzevria sales‒ Negative impact in the quarter from currency fluctuations‒ Inventory write downs and manufacturing termination fees relating to Evusheld reduced Gross Profit by $335m in Q4 2022‒ Mix impact from profit-sharing arrangements (e.g. Lynparza)‒ Reported Gross Margin impacted by unwind of Alexion inventory fair value adjustment | |
| R&D expense | $2,625m | 2% Actual 9% CER | $2,526m | 5% Actual 12% CER | + Increased investment in the pipeline* Core R&D-to-Total Revenue ratio of 23% (Q4 2021: 20%) | |
| SG&A expense | $4,621m | -10% Actual -3% CER | $3,583m | 6% Actual 15% CER | + Market development activities for recent launches+ Core SG&A-to-Total Revenue ratio of 32% (Q4 2021: 28%). The year-on-year comparison is impacted by differences in cost phasing during H2 2021 and H2 2022 | |
| Other operating income[21] | $189m | 29% Actual 33% CER | $130m | -11% Actual -7% CER | * Reported and Core OOI includes income from sale of t he Waltham site | |
| Operating margin | 10% | 12pp Actual 14pp CER | 23% | -4pp Actual -3pp CER | * See Gross Margin and Expenses commentary above | |
| Net finance expense | $315m | -6% Actual stable at CER | $245m | 5% Actual 9% CER | * Reported impacted by a reduction in the discount unwind on acquisition-related liabilities | |
| Tax rate | -16% | n/m | 10% | -7pp Actual -6pp CER | * The Reported and Core Tax Rates in the quarter reflected IP incentive regimes, geographical mix of profits and adjustments to prior year tax liabilities including several one-time items* Variations in the tax rate can be expected to continue quarter to quarter | |
| EPS | $0.58 | n/m | $1.38 | -17% Actual -5% CER | * Further details of differences between Reported and Core are shown in Table 12 |
Table 3 : Pipeline highlights since prior results announcement
| Event | Medicine | Indication / Trial | Event |
| Regulatory approvals and other regulatory actions | Imfinzi +/- Imjudo | NSCLC (1st-line) (POSEIDON) | Regulatory approval (US, JP) |
| Imfinzi + Imjudo | Hepatocellular carcinoma (1st-line) (HIMALAYA) | Regulatory approval (JP) | |
| Imfinzi | Biliary tract cancer (TOPAZ-1) | Regulatory approval (EU, JP) | |
| Lynparza | mCRPC (1st-line) (PROpel) | Regulatory approval (EU) | |
| Enhertu | HER2-positive breast cancer (2nd-line) (DESTINY-Breast03) | Regulatory approval (JP) | |
| Enhertu | HER2-low breast cancer (3rd-line) (DESTINY-Breast04) | Regulatory approval (EU) | |
| Enhertu | HER2-positive/HER2-low gastric (2nd-line) (DESTINY-Gastric01, DESTINY-Gastric02) | Regulatory approval (EU) | |
| Calquence | CLL[22] (ELEVATE-TN) | Regulatory approval (JP) | |
| Calquence | Maleate tablet formulation | Regulatory approval (EU) | |
| Forxiga | HFpEF[23] (DELIVER) | Regulatory approval (EU, JP) | |
| Airsupra | Severe asthma (MANDALA/DENALI) | Regulatory approval (US) | |
| Tezspire | Pre-filled pen | Regulatory approval (US, EU) | |
| Regulatory submissions or acceptances | Enhertu | HER2-mutated NSCLC (2nd-line+) (DESTINY-Lung01) | Regulatory submission (EU, JP) |
| Calquence | CLL (ASCEND) | Regulatory submission (CN) | |
| Beyfortus | RSV[24] (MELODY/MEDLEY) | Regulatory submission (US) | |
| Soliris | NMOSD[25] | Regulatory submission (CN) | |
| Major Phase III data readouts and other developments | Imfinzi | NSCLC (1st-line) (PEARL) | Primary endpoint not met |
| capivasertib | HR[26]+/HER2-negative breast cancer (1st-line) (CAPItello-291) | Fast Track Designation (US) | |
| Orpathys + Tagrisso | NSCLC with MET overexpression (SAVANNAH/SAFFRON) | Fast Track Designation (US) | |
| tozorakimab | Treatment/prevention of acute respiratory failure in patients with viral lung infection (TILIA) | Fast Track Designation (US) | |
| Saphnelo | Idiopathic inflammatory myopathies | Orphan Drug Designation (US) | |
| Evusheld | Pre-exposure prophylaxis of COVID-19 | Revision of Emergency Use Authorisation (US) – Evusheld is not currently authorised in the US until further notice from the FDA[27] |
Corporate and business development
In January 2023, AstraZeneca entered into a definitive agreement to acquire CinCor Pharma, Inc. (CinCor), a US-based clinical-stage biopharmaceutical company focused on developing novel treatments for resistant and uncontrolled hypertension as well as chronic kidney disease. The acquisition will bolster AstraZeneca’s cardiorenal pipeline by adding CinCor’s candidate drug, baxdrostat (CIN-107), an aldosterone synthase inhibitor for blood pressure lowering in treatment-resistant hypertension.
AstraZeneca has initiated a tender offer to acquire all of CinCor’s outstanding shares for a price of $26 per share in cash at closing, plus a non-tradable contingent value right of $10 per share in cash payable upon a specified regulatory submission of a baxdrostat product. Combined, the upfront and maximum potential contingent value payments represent, if achieved, a transaction value of approximately $1.8bn. As part of the transaction, AstraZeneca will acquire the cash and marketable securities on CinCor’s balance sheet, which totalled approximately $522m as of 30 September 2022.
In January 2023, AstraZeneca completed the acquisition of Neogene Therapeutics Inc. (Neogene), a global clinical-stage biotechnology company pioneering the discovery, development and manufacturing of next-generation T-cell receptor therapies that offer a novel cell therapy approach for targeting cancer. AstraZeneca acquired outstanding equity of Neogene for a total consideration of up to $320m, on a cash and debt free basis. This includes an initial payment of $200m on deal closing, and a further up to $120m in both contingent milestones-based and non-contingent consideration.
Following the approval of Airsupra in January 2023, AstraZeneca has notified Avillion of its intention to commercialise Airsupra in the US. Under the terms of the agreement with Avillion, AstraZeneca will pay single-digit royalties and milestones based on future sales and developments.
In December 2022, AstraZeneca completed the sale of its R&D facility in Waltham, Massachusetts, US, to Alexandria Real Estate Equities, Inc, (ARE), a leading owner, operator and developer of life science campuses. ARE will lease the site back to AstraZeneca for a four-year term while construction is being completed on the new AstraZeneca R&D Centre and Alexion Headquarters in Kendall Square, Cambridge, Massachusetts, announced in April 2022.
In January 2023, AstraZeneca completed the sale of its West Chester site in Ohio, US, to National Resilience, Inc., a technology-focused manufacturing company dedicated to broadening access to complex medicines. The West Chester site will continue to manufacture medicines for AstraZeneca.
Post Alexion Acquisition Group Review (PAAGR)
In conjunction with the acquisition of Alexion in 2021, AstraZeneca initiated a comprehensive review, aimed at integrating systems, structure and processes, optimising the global footprint and prioritising resource allocations and investments. These activities are expected to be substantially complete by the end of 2025, with a number of planned activities having commenced in late 2021 and during 2022.
During 2022, the Company has refined the scope and estimates of the planned activities, resulting in an increase to the expected one-time restructuring costs over the life of the programme of $0.5bn, of which $0.3bn are non-cash costs, an increase in capital investments of $0.1bn, and an increase to the anticipated annual run-rate pre-tax benefits by the end of 2025 of $0.7bn.
In addition, initial financial estimates for the Company’s planned upgrade of its Enterprise Resource Planning IT systems have been completed, resulting in anticipated incremental capital investments for software assets of $0.6bn and one-time restructuring cash costs of $0.3bn. This investment builds strongly on the PAAGR and is expected to be substantially complete by the end of 2030, realising significant strategic and compliance-related benefits from transforming core enterprise-wide processes, harmonising systems architecture and enabling future digital capabilities.
Consequently, the total programme activities are now anticipated to incur one-time restructuring costs of approximately $2.9bn, of which approximately $1.9bn are cash costs and $1.0bn are non-cash costs, and capital investments of approximately $0.9bn.
Run-rate pre-tax benefits, before reinvestment, are now expected to be approximately $1.9bn by the end of 2025. In line with established practice, restructuring costs will be excluded from our Core (non-GAAP) financial measures.
During 2022, AstraZeneca recorded restructuring charges of approximately $0.7bn in relation to the PAAGR (2021: $1.0bn), bringing the cumulative charges to date under this programme to $1.7bn. Of these costs, $0.7bn are non-cash costs arising primarily from impairments and accelerated depreciation on affected assets. As at 31 December 2022, the PAAGR has realised annual run-rate pre-tax benefits, before reinvestment, of $0.8bn.
Sustainability summary
In November 2022, AstraZeneca achieved third position overall in the 2022 Access to Medicine Index.
In January 2023, Chair Leif Johansson alongside Senior Executive Team members Marc Dunoyer, Dave Fredrickson and Iskra Reic attended the World Economic Forum in Davos, focusing on investing in health as the foundation of strong and resilient societies, and the need for collective early action to build more sustainable and equitable healthcare systems, including through collaborations such as the Partnership for Health System Sustainability and Resilience and the Sustainable Markets Initiative.
Management changes
Katarina Ageborg, EVP Global Sustainability and Chief Compliance Officer, has announced her retirement. Jeffrey Pott, Chief Human Resources Officer and General Counsel, will assume responsibility as Chief Compliance Officer in addition to his current responsibilities. Pam Cheng, Executive Vice-President, Operations and Information Technology, will assume responsibility for leadership of Sustainability strategy and function in addition to her existing responsibilities. The Board thanks Katarina for her lasting legacy, having positioned AstraZeneca amongst the global leaders in sustainability, backed by world-leading platforms and science-based targets.
Conference call
A conference call and webcast for investors and analysts will begin today, 9 February 2023, at 11:45 GMT. Details can be accessed via astrazeneca.com.®
Reporting calendar
The Company intends to publish its results for the first quarter of 2023 on Thursday 27 April 2023.