Obesity drug gives AstraZeneca shares shot in the arm

AstraZeneca posted an upbeat set of third quarter results, with strong cancer drug sales making up for declining revenues from Covid-19 related medicines. After currency fluctuations, total revenue rose 5% to $11 billion in the third quarter. This was despite a $2.8 billion fall in Covid-19 product sales.

Stripping out sales of Covid-19 products, revenues rose by an encouraging 13% over the period – up 15% over nine months. Revenues from oncology products also increased by 20% in the third quarter, while sales from its rare disease portfolio also increased by 12%. Meanwhile, operating profits rose by 4% to $2 billion during the period.

“Our company continued its strong growth trajectory in the third quarter with total revenue from our non‑Covid-19 medicines up 13% compared to last year,” said chief executive officer Pascal Soriot. “We initiated several Phase III trials of high-potential molecules this quarter, including for volrustomig, our PD-1/CTLA-41 bispecific antibody. Our portfolio of bispecifics [a new type of antibody treatment] has the potential to replace the first-generation checkpoint inhibitors across a range of cancers.”

The shares rose 3% on Thursday.

AstraZeneca buys early stage obesity drug

The drug giant has also seen encouraging data from fixed dose combination trials of its product zibotentan with Farxiga which, the company says, could improve treatment outcomes for kidney disease patients. Meanwhile, Soriot also says that the company’s new obesity drug ECC5004 has the potential to help a billion people suffering from cardiometabolic diseases including type-2 diabetes, “both a monotherapy and in combinations.”

Diabetes patients typically take a cocktail of medicines to control the disease. AstraZeneca has just purchased the full rights to the product from Chinese company Eccogene in every worldwide territory but China, where the two companies will partner on distribution. The product is in the same class of medicines as Novo Nordisk’s obesity drug Wevgovy but is in early stage trials. Wevgovy is a blockbuster and made around $1.4 billion in sales between July and September 2023 alone.

Phase I trials of AstraZeneca’s once-a-day product have so far shown encouraging weight loss compared to the placebo and good tolerability.

AstraZeneca raises its earnings guidance

On another positive note, Soriot told investors that “given the momentum in the year to date,” AstraZeneca is increasing its full-year revenue guidance. At constant currency rates, total sales for the full-year 2023 – stripping out Covid-19 medicines – are now forecast to increase by a “low-teens percentage”. Meanwhile, core earnings per share (EPS) is now expected to rise by a low double-digit to low teens percentage at constant currency rates.

In September, analysts at broker Morgan Stanley increased their price target on the shares to £129 from £127.

The shares are down 10% this year to £100.90 and are trading off their three year highs. As such, they are worth watching as the pharmaceutical sector remains a decent port in the current stock market storm.

Past performance is not a guide to future performance.