AstraZeneca PLC Earnings - Q1 2025 Analysis
Positives
- Total revenue grew by 10% in Q1.
- R&I delivered another strong quarter, up 13% to $2.1 billion in revenue.
- Total revenue gross margin was 84% in Q1, benefiting from product sales mix and some favorable FX movements.
- Biopharmaceuticals medicines delivered a strong start to 2025 with total revenue reaching $5.6 billion in Q1, reflecting a growth of 12% compared to Q1 2024.
- Core operating profit increased by 12% and core EPS increased by 21% reflecting continued focus on operating leverage.
Q&A Highlights - Q1 2025
Analyst asked about the impact of the Medicare Part D redesign in the US on the company's financial performance and outlook for 2025.
The company expects the Medicare Part D redesign to have a one-time impact on its financial performance in Q1, but it will not affect the company's volume growth going forward. The company has a strong pipeline of new products, including Tagrisso and Calquence, which are expected to drive growth in the US market.
Analyst asked about the company's confidence in the QCS biomarker for its AVANZAR program.
The company is confident in the QCS biomarker based on the mechanism of action of Datroway, which is dependent on the amount of TROP2 that gets internalized. The company has seen similar trends in other data sets and has embedded the QCS biomarker in its AVANZAR program. The company remains confident in the combinability of Datroway with Imfinzi and the application of that into the important patient population in first-line non-small cell lung cancer.
Analyst asked about the potential launch of the company's three programs, including an oral PCSK9, and when pivotal data could be expected.
The company believes that an oral PCSK9 will unlock a large opportunity in the US market, where 70% of the patient population is not at goal. The company also believes that the product will be priced at a lower level, making it more accessible in emerging markets. The company is confident in the uniqueness of its oral PCSK9 and is planning to combine it with its own products, such as Crestor and ezetimibe. The company is also planning to invest in CapEx to support the growth of its products, including oral GLP-1, PCSK9, and baxdrostat.
Analyst asked about the impact of the Medicare Part D redesign on the company's financial performance and outlook for 2025.
The company expects the Medicare Part D redesign to have a one-time impact on its financial performance in Q1, but it will not affect the company's volume growth going forward. The company has a strong pipeline of new products, including Tagrisso and Cal
Analyst asked about the potential filing strategy for DB09, specifically whether the company plans to file the combination arm before the monotherapy arm based on data.
Pascal Soriot, CEO of AstraZeneca, stated that the company is in discussions with regulatory authorities regarding the filing strategy for DB09, and that they are optimistic about the potential for presentation of DESTINY-Breast09 data at ASCO.
Analyst asked about the commercial opportunity of SERENA-6 relative to the $5 billion framed for the molecule as a whole, and how the company is thinking about the size of SERENA-6 and factors that will affect adoption, such as testing duration and therapy.
Pascal Soriot, CEO of AstraZeneca, stated that the US pricing is a complex issue, and that the US has been funding innovation for the industry for a long time. He believes that Europe has to invest a greater share of their health care expenses in innovative medicines, and that the investment in innovation in Europe has to go up. He also mentioned that the key piece is that Europe, at least the richer countries in Europe, have to contribute more to pharmaceutical innovation, just like they have to contribute more to their own defense. He stated that Europe's GDP would have to be reallocated to pharmaceutical innovation, which would enable accelerated access and a pricing level that would enable to rebalance the funding of that innovation between the US and Europe.
Analyst asked about the SERENA-6 opportunities, specifically how the program comprises early adjuvant breast cancer trials as well as metastatic studies, and how the company is thinking about the size of SERENA-6 and factors that will affect adoption.
David Fredrickson, Executive Vice President, Global Head of Oncology at AstraZeneca, stated that the program comprises early adjuvant breast cancer trials as well as metastatic studies. He mentioned that if they are able to unlock an opportunity within the adjuvant setting and within SERENA-4, that would do the lion's share of the work to get them to the $5 billion-plus. He also stated that SERENA-6 is an important study because there are 85,000 patients with frontline drug-treated horm
Analyst asked about the timeline for the release of data from the AVANZAR study.
The company expects to see the data from the AVANZAR study in the second half of 2023, and there is no reason to believe that the timeline will be delayed.
Analyst asked about the company's tax strategy, specifically regarding its distribution of taxes around the world, including in the US.
The company pays a fair share of taxes in the US, and does not optimize its tax strategy to the extent that it does not pay its fair share of taxes. The company takes advantage of transfer prices, but the numbers mentioned in the annual report relate to things like patent boxes and government incentives for research and R&D funding.
Analyst asked about the company's thoughts on the potential success of Enhertu in the adjuvant setting, and the impact of the recently passed legislation on small molecules, including Calquence.
The company believes that the recently passed legislation will benefit the industry, including AstraZeneca, and that it will be beneficial for existing medicines such as camizestrant. The company is also encouraged by the potential willingness of Congress to address the 340B issues. Regarding Enhertu, the company believes that it has the potential to improve on the current standard of care in the neoadjuvant setting, which includes multiple drugs, and in the post-neoadjuvant setting for patients with residual disease.
Analyst asked about the broader strategy around PCSK9 and the total potential of the product across indications.
Sharon Barr, the company's Head of Cardiovascular, Renal, and Metabolism Therapeutic Area, answered that they are launching three Phase III studies and moving at pace to have their pivotal study in LDL lowering initiated by the end of 2023. They are not commenting on the readout timelines for these pivotal studies but are running a combined primary and secondary outcomes study and plan to launch with their LDL-lowering study while moving ahead in parallel with their outcomes study that will help facilitate market uptake.
Analyst asked about the potential for disruptions or delays in Astra's interactions with the FDA due to recent personnel changes.
Susan Galbraith stated that the company has not seen any delays in interactions with the FDA to date, and that they continue to monitor the situation.
Analyst asked about the potential impact of the recent lorundrostat data from Mineralys on the upcoming Phase III readout for baxdrostat.
Sharon Barr stated that the Mineralys data is encouraging, validating the critical unmet medical need that Astra has been focused on. However, she emphasized that baxdrostat has the potential to be best-in-class, with a competitive profile and impressive mercury-lowering at a low dose. She also noted that the company is in a very competitive position and looks forward to the Phase III pivotal data for BaxHTN later this year.
Analyst asked about the potential for disruptions or delays in Astra's interactions with the FDA due to recent personnel changes.
Pascal Soriot stated that the company has started well in 2025, with a growth momentum that continues. He emphasized that the company is on track to achieve its expectations and guidance, and that they are entering a catalyst-rich period by the end of 2025 and early 2026. He noted that the company has five positive Phase III studies, including SERENA-6, MATTERHORN, and DB09, and has had 13, 1-3, regulatory approvals across major regions in the quarter. He also highlighted that revenue is up 10% and expenses are well managed, with SG&A growing by 5% even though the company has many launches. As a result, the company's operating profit is up 12% and its EPS is 21%.
Analyst asked about the potential impact of the recent lorundrostat data from Mineralys on the upcoming Phase III readout for baxdrostat.
Sharon Barr reiterated that the Mineralys data is encouraging, validating the critical unmet medical need that Astra has been focused on. However, she emphasized that baxdrostat has the potential
