By Ben Hirschler
LONDON (Reuters) – AstraZeneca, struggling with loss of patents on blockbusters like cholesterol pill Crestor, reported another quarter of falling drug sales on Thursday as it awaits pivotal clinical trial data that may revive its fortunes.
Chief Executive Pascal Soriot believes 2017 will mark the trough for the British group, as it starts to put generic losses behind it and builds up sales of recently launched and experimental cancer medicines.
“The pipeline continued to deliver in what we expect will be a pivotal year,” he said. “The total revenue performance reflected the transitional impact of recent patent expiries, which is expected to recede in the second half of the year.”
Despite income from disposals and external deals, first-quarter revenue fell 12 percent to $5.4 billion (£4.20 billion), although core earnings per share (EPS) rose 4 percent in dollar terms to 99 cents – helped by one-off gains on the sale of short-term investments.
Industry analysts, on average, had forecast revenue of $5.4 billion and earnings of 82 cents, according to Thomson Reuters data.
So-called “externalisation” revenue, which some analysts argue unduly flatters AstraZeneca’s results, rose 2 percent to $562 million, while product sales fell 13 percent to $4.8 billion.
Shares in the company fell 1.5 percent in early trade, with Berenberg analysts noting that several key new drugs had missed consensus sales forecasts, including heart drug Brilinta, Lynparza for cancer and diabetes treatment Farxiga.
AstraZeneca reiterated its expectation that full-year revenue would decline at a low to mid single-digit percentage rate, with core EPS dropping by a low to mid-teens percentage.
For investors, owning AstraZeneca shares represents a major bet on the company’s oncology portfolio. It is already doing well with new cancer pill Tagrisso, but the really big opportunity lies in cancer immunotherapy.
Results from its closely watched MYSTIC immuno-oncology (I-O) trial in previously untreated lung cancer patients are expected mid-year.
Merck & Co, Bristol-Myers Squibb and Roche already have similar drugs approved for lung cancer but AstraZeneca hopes to carve out a market by proving the value of combining two I-O drugs, durvalumab and tremelimumab.
Analysts at Jefferies see a $20 billion opportunity for I-O drugs in first-line, non-small cell lung cancer, with sales split between I-O monotherapy (administering one such medicine on its own); I-O plus conventional chemotherapy; and combinations of two I-O drugs, as in AstraZeneca’s approach.
(Reporting by Ben Hirschler; editing by Jason Neely)