AstraZeneca PLC Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Growth Momentum: Total revenue grew by 11%, core EPS increased by 15%. Achieved 31 regulatory approvals and 16 positive Phase III trial results, with 6 data sets presented in plenary sessions at major conferences.
• Regional Growth: Robust growth in the U.S. (11% revenue increase) and emerging markets (excluding China, 21% revenue increase).
• Pipeline Success: Announced positive Phase III study readouts in 2025, including DESTINY-Breast05/11, TROPION-Breast02, Bax24, and TULIP-Subcu.
• U.S. Developments: Landmark agreement with the U.S. government providing pricing clarity, 3-year tariff exemption, working on price equalization, expanding U.S. manufacturing, and harmonizing listing structure.
• Financials: Core gross margin was 83% in the first 9 months. R&D expenses increased by 16%, core R&D costs accounted for 23.3% of total revenue. Core operating margin was 33.3%. Cash flow from operating activities was up 37% to $12.2 billion year-to-date.

Segment Performance

• Oncology: Total revenue grew 16% in the first 9 months to $18.6 billion. U.S. revenue grew 19%, emerging markets 20%. Q3 oncology revenue grew 18%. Tagrisso had sales of $1.9 billion in Q3 (+10% Y/Y). Calquence total revenues increased by 11% to $916 million in Q3. Lynparza had revenues of $837 million in Q3 (+5% Y/Y). Truqap total revenues of $193 million in Q3 represented 54% growth versus Q3 last year. Imfinzi and Imjudo grew 31% and 14%, respectively. Enhertu total revenues grew 39% in Q3. Datroway showed early uptake in U.S. and Europe.
• Biopharmaceuticals: Total revenue reached $17.1 billion in the year-to-date, reflecting 8% growth. R&I grew 40% in the quarter, with growth medicines making up over 60% of revenue. Fasenra grew 20% in the quarter, Tezspire 47%, Breztri 20%, Saphnelo 44%. CVRM was flat in the quarter, with Brilinta down 56%, Farxiga up 8%, Lokelma up 30%.
• Rare Disease: Rare Disease medicine grew 6% to $6.8 billion in the first 9 months. Ultomiris grew 17% in Q3, Soliris declined, Strensiq grew 28%, Koselugo grew 79%. Gefurulimab Phase III data in generalised myasthenia gravis, eneboparatide analysis ongoing, anselamimab submission plans, efzimfotase alfa results expected in H1 2026

Guidance

• Reiterated full-year guidance: Total revenue and core EPS are anticipated to increase by high single-digit and low double-digit percentages at constant exchange rates, respectively.
• Fourth quarter 2024 had no significant milestone revenue, affecting year-over-year growth rate comparisons. China's fourth quarter revenues affected by VBP-associated stock compensation costs and year-end hospital budget capping. R&D and SG&A expenses expected to step up sequentially in Q4 versus Q3.

Risks

• Forward-looking statements involve risks and uncertainties, including factors that could cause actual results to differ materially from forward-looking statements. Risks include regional disruptions, competitive pressures, regulatory changes, and trial outcomes affecting product launches and financial performance.

Question and Answer

• Q: Good afternoon, and welcome to AstraZeneca's 9 months and Q3 2025 webinar for investors and analysts. Before I hand over to AstraZeneca, I'd like to read the Safe Harbor Statement.

A: A very warm welcome to AstraZeneca's Year-to-Date and Third Quarter 2025 Presentation... I will hand over to Pascal.

• Q: Two questions for you, please. One, thank you for the comments around the environment in Washington. Just wondering if you could comment on what is the risk of residual activity coming from the administration? How confident are you that the deal that AstraZeneca has managed to secure removes enough of the overhang?

A: The first question, what I would say about this is that we have addressed the four points in the President's letter... we have an agreement with the U.S. government, and we don't expect anything more to come.

• Q: The $10 billion number that you just mentioned in terms of the catalyst potential coming out of the '27/'28 period, is that part of the $80 billion? Or is that incremental potential already on top of that?

A: This is part of our $80 billion. This is, by the way, not a 2030 number. It's a peak year revenue number... it will contribute to achieving our 2030 ambition.

• Q: Perhaps you could indicate your level of comfort on where 2026 consensus sits at the low end at 34% and talk about the step-up to get there? And then more broadly, could you speak about the pushes and pulls, please, on 2026 margin?

A: The key headwind in 2026 will really be the loss of Farxiga in both U.S. as well as China... we're going to continue investing behind growth brands and plan for new launches such as baxdrostat, cami and dato.

• Q: Just a couple on Wainua for Sharon or Ruud. Just firstly on CARDIO-TTRansform. Just your thoughts on whether that could meaningfully reshape treatment guidelines long term? And then also just your thoughts on whether any new simpler diagnostic tests are coming soon to potentially expand the cardiomyopathy population?

A: We look forward to the readout of the Phase III CARDIO-TTRansform study in 2026... we continue to work on all fronts to be able to drive both earlier detection and earlier treatment.

• Q: I've got one each for Sharon and Susan on Phase III starts you've each referenced. So for Sharon, I wonder if you could just remind us of the obesity portfolio, the oral and amylin as we look for Phase II data next year. How are you thinking about your target competitive profile given the competitive landscape has rapidly changed?

A: We are moving forward with multiple molecules in our weight management portfolio... we have seen no red flags to date and continue to move forward at pace and expect to enter Phase III pending competitive data.

• Q: Two questions, please. Firstly, one, just following up on the TB02 Datroway data at ESMO. Maybe you could talk about the read across. From the better tolerability you showed relative to competing products there, both to your Datroway trials, but also more importantly, across the other ADC programs, what can we learn from that?

A: We're delighted with the TROPION-Breast02 data... we look forward to having the future readouts in the coming months and years.

• Q: Peter Verdult here, BNP. Apologies for any background noise. Two questions for you, Pascal. I thought it was noteworthy at the investor event, the ESMO cancer event. You called out baxdrostat in your opening remarks. KOLs that we're speaking to, say, they see sort of placebo-adjusted blood pressure lowering in sort of 11, 12, 13 range. Their excitement around this asset is going to be cranked up. So, I know you can't talk to the data. We're going to have to wait until Sunday. But when you look at consensus expectations down at $2 billion, would you expect that expectations for this asset materially increase post the Bax24 data?

A: I'm personally very excited about this product... you will see the data we have over 24 hours. This is really important because you need to control blood pressure at night in particular, the early morning.

• Q: Mattias Häggblom, Handelsbanken. Two questions, please. Firstly on Farxiga, following the validation of the pattern in U.K. and subsequent generic launch, remind me why this loss would not encourage generic companies to explore similar challenges elsewhere in Europe prior to pattern exploration in '28. And why the situation in the U.K. was unique?

A: It's a very specific U.K. law that doesn't apply to other countries. We can cover the details separately with you if you want offline.

• Q: I just wanted to get your thoughts on Enhertu's trajectory from here, given that we now have the DB09 and the DB11 data and PDUFA next year, which have been seen historically as two of the largest opportunities. Some of our KOL feedback has suggested that initial uptake may be a little bit tentative to begin with. So yes, we'll just be keen to get your thoughts on that.

A: DESTINY-Breast09 is an important opportunity to move Enhertu into a frontline setting... we're really looking for this to be an opportunity to make sure that we're driving to the way that DB09 was designed, which is treat to progression.