AstraZeneca’s Promise To Investors: 10 New Drugs By 2020

CEO Pascal Soriot said the big pharma is on track to return to growth faster than anticipated, with 2017 revenues expected to be in line with 2013. A key driver of growth will be new drugs, many of which have been gained through deal-making and acquisitions.

A key driver of AstraZeneca PLC’s growth in the coming years will be new drugs, 10 of which the big pharma will launch by 2020, Pascal Soriot told investors during the J.P. Morgan Healthcare Conference Jan. 14.

Rebuilding AstraZeneca’s pipeline has been the cornerstone of Soriot’s turnaround strategy for the company since taking over as CEO in late 2012. He has worked toward that goal throughout 2013 partly by increasing the pace of development of internal drug candidates, as well as through licensing and acquisitions.

The company completed more than a dozen licensing deals or acquisitions in the last year, fortifying the pipeline in areas such as oncology, cardiovascular disease and diabetes. AstraZeneca then capped off the year by buying out Bristol-Myers Squibb Co.’s share of its diabetes joint venture for $2.7 billion upfront (Also see "AZ Doubles Down On Diabetes, Buys Out Bristol’s Share in Alliance" - Pink Sheet, 23 Dec, 2013.).

AstraZeneca’s Big 2013 Deals

Bristol’s share in diabetes

Spirogen (ADC developer)

Merck & Co.’s WEE1 inhibitor

Amplimmune (immuno-oncology)

Fibrogen’s anemia candidate

Pearl (respiratory drug developer)

Omthera (Epanova developer)

Alphacore (cardiovascular disease)

Moderna (technology deal)

Source: Strategic Transactions Database

The result is that the company’s pipeline has grown stronger and the mix of products has shifted away from primary care and toward specialty care and biologics.

During an investor meeting in March 2013, when Soriot laid out his turnaround plan for the company, AstraZeneca set a goal to have 10 products in late-stage development by 2016 and eight in development by 2013.

“In fact, we have already achieved or over-achieved our 2016 goal,” Soriot said, pointing to 11 projects in late-stage development. Of those, seven are in Phase III development and four in registration. The company also has 27 NMEs in Phase II development and 33 in Phase I.

A First Sales Forecast

With some early progress behind him, Soriot provided investors with long-term financial guidance for the first time since becoming CEO. He said the company expects 2017 revenues to be in line with 2013 revenues, amounting to a return to growth faster than many industry observers expect, given that the company expects to lose Nexium (esomeprazole) to generic competition in 2014 followed by Crestor (rosuvastatin) in 2016.

The forecast suggests $25.7 billion in 2017 revenues, about 15% above consensus estimates, Bank of America analyst Sachin Jain said in a Jan. 14 research note. “While the AstraZeneca guidance may excite, we sound a note of caution,” Jain said, pointing out that the company’s earnings per share have fallen 15% since the March strategy day due to higher costs and that the latest update only provides a top-line outlook.

But the news led Leerink analyst Seamus Fernandez to upgrade AstraZeneca and increase the company’s stock price target to $68 per share from $55 per share.

“With at least 10 exciting new drugs likely to reach the market over the next five years, we believe AstraZeneca is on the cusp of evolving from a business with greater than 60% primary care small molecule exposure to becoming a leader in biologics and specialty care with particularly exciting opportunities in oncology and immuno-oncology as well as respiratory biologics,” he said in a Jan. 14 research note.

AstraZeneca’s Potential Near-Term Growth Drivers
Drugs In Phase III	Drugs In Registration
Selumetinib for MEK 2L KRAS NSCLC	Olaparib for BRCA ovarian cancer (filed in Europe/targeted for filing in U.S. in 2014)
Moxetumomab for lymphoma	Epanova for hypertriglyceridemia
Brodalumab for psoriasis	Naloxegol for opioid-induced constipation
Benralizumab for asthma	Metroleptin for lypodystrophy
Lesinurad for gout
PT003 LABA/LAMA for COPD
CAZ AVI antibiotic
Source: AstraZeneca presentation (pipeline as of Dec. 31)

Oncology is one area in which the company has made strides, particularly in the emerging field of immuno-oncology, where AstraZeneca has not been regarded as a leader. The company’s immuno-oncology pipeline includes the CTLA-4 inhibitor tremelimumab, acquired from Pfizer Inc. in 2011, and an anti-PD-1 antibody, gained through the acquisition of Amplimmune Inc. last year (Also see "MedImmune To Enhance Oncology Pipeline With Buyout Of Neighbor Amplimmune" - Pink Sheet, 26 Aug, 2013.). Bristol, Merck & Co. Inc. and Roche all have promising PD-1 or PD-L1 inhibitors further ahead in development, helping to buoy their stock prices.

AstraZeneca quickly moved the PD-1 project into Phase I testing last year, Soriot said. “Our pipeline of immuno-oncology products is progressing very rapidly, and we suddenly have a large number of targets in preclinical stage,” he said. “We believe the future of immunotherapy is combination, and that’s one of the reasons why we why we think we are in a very strong position.”

A combination trial testing AstraZeneca’s PD-1 inhibitor with tremelimumab recently has started, and the company plans to test it in combination with its EGFR inhibitor Iressa (gefitinib). The firm is preparing to resubmit Iressa in the U.S. in the third quarter for patients with EGFR mutation positive non-small cell lung cancer.

Iressa was approved in the U.S. in general NSCLC patients in 2003, but its use later was restricted due to lack of efficacy. It went on to be approved in other parts of the world for patients with EGFR-positive NSCLC and recognized as an early targeted cancer treatment. The company also expects to file the PARP inhibitor olaparib for ovarian cancer in the U.S. later this year, Soriot said.

At the same time, AstraZeneca is preparing to launch the SGLT-2 inhibitor Forxiga (dapagliflozin) in the U.S. following its January approval (Also see "AstraZeneca’s Farxiga Label Includes, But Downplays, Bladder Cancer Risk" - Pink Sheet, 13 Jan, 2014.). And the company expects to have other new products to launch this year too, including the fish oil derivative Epanova, which is under review in the U.S. for the treatment of severe hypertriglyceridemia with a May 5 action date, and an easier-to-use dual-chamber pen version of the GLP-1 inhibitor Bydureon (exenatide extended release) for diabetes.

This is setting up to be a busy year for the big pharma and a critical one for keeping its turnaround on track. But one thing that could be slowing down is business development.

“Now, what we have to do is execute on what we have,” Soriot said during the breakout session. “We have a lot in our hands, a lot to do. We will continue doing business development but possibly not at the pace we have in 2013.”