AstraZeneca 9 February 2023 07:00 GMT Full year and Q4 2022 results Strong performance and pipeline progress in 2022 underpins 2023 outlook On track to deliver industry-leading revenue growth through 2025 and beyond Revenue and EPS summary Product Sales Collaboration Revenue Total Revenue Reported2 EPS3 Core4 EPS FY 2022 Q4 2022 % Change % Change $m Actual CER1 $m Actual CER 42,998 18 24 10,798 (6) 2 1,353 54 56 409 (20) (19) 44,351 19 25 11,207 (7) 1 $2.12 n/m n/m $0.58 n/m n/m $6.66 26 33 $1.38 (17) (5) Financial performance (FY 2022 figures unless otherwise stated, growth numbers and commentary at CER) Total Revenue increased 25% to $44,351m, with growth coming from all therapy areas, and from the addition of Alexion, which was incorporated into the Group's results from 21 July 2021 Total Revenue in the fourth quarter was impacted by the decline in Vaxzevria. Excluding Vaxzevria, Total Revenue in the quarter increased 17% Oncology Total Revenue including milestone receipts increased 20%; Oncology Product Sales increased 19%. Total Revenue CVRM5 increased 19%6, R&I7 increased 3%, and Rare Disease increased 10%6 Core Gross Margin of 80%, up six percentage points, reflecting the lower revenue from Vaxzevria and the increased share of Oncology and Rare Disease medicines. Core Gross Margin of 77% in the fourth quarter was impacted by inventory write downs and manufacturing termination fees for Evusheld Core Total Operating Expense increased 23%, reflecting the addition of Alexion, and continued investment in new launches and the pipeline to deliver sustainable long-term growth Core Operating Margin of 30%, up four percentage points Core EPS increased 33% to $6.66. Second interim dividend declared of $1.97 per share, making a total dividend declared for FY 2022 of $2.90 for the year. The Core Tax Rate for the year was 17%, reflecting IP incentive regimes, geographical mix of profits and adjustments to prior year tax liabilities FY 2023 Guidance summary (Growth numbers at CER) Total Revenue is expected to increase by a low-to-midsingle-digit percentage Total Revenue excluding COVID-19 medicines8 is expected to increase by a low double-digit percentage Core EPS is expected to increase by a high single-digit to low double-digit percentage Pascal Soriot, Chief Executive Officer, AstraZeneca, said: "2022 was a year of continued strong company performance and execution of our long-term growth strategy. We made excellent pipeline progress with a record 34 approvals in major markets and we are initiating new late-stage trials for high potential medicines such as camizestrant, datopotamab deruxtecan and volrustomig. In 2023, we expect to see another year of double-digit revenue growth at CER, excluding our COVID-19 medicines. We will continue to invest behind our pipeline and recent launches while continuing to improve profitability. We plan to initiate more than thirty Phase III trials this year, of which ten have the potential to deliver peak year sales over one billion dollars. Our R&D success and revenue increase in 2022 demonstrate that we are on track to deliver industry-leading revenue growth through 2025 and beyond, and have set AstraZeneca on a path to deliver at least fifteen new medicines before the end of the decade." 1 Key milestones achieved since the prior results Key regulatory approvals: US approval for Airsupra (PT027) in asthma. EU approvals for Lynparza9 in mCRPC10 (PROpel), Enhertu in gastric cancer (DESTINY-Gastric01) and HER211-low breast cancer (DESTINY-Breast04),Imfinzi in biliary tract cancer (TOPAZ-1),Imfinzi+Imjudo in HCC12 and Forxiga in heart failure with preserved ejection fraction. Five approvals in Japan, including Imfinzi and Imjudo in liver cancer (TOPAZ-1) and NSCLC13 (POSEIDON) and Calquence for treatment-naïve CLL (ELEVATE-TN) Other regulatory milestones: US Fast Track designations for capivasertib in HR-positiveHER2-negative breast cancer (CAPItello-291), tozorakimab in treatment/prevention of acute respiratory failure in patients with viral lung infection (TILIA), and Orpathys plus Tagrisso in NSCLC with MET14 overexpression (SAVANNAH/SAFFRON); US Orphan Drug Designation for Saphnelo in idiopathic inflammatory myopathies; US Emergency Use Authorisation for Evusheld revised - as of January 2023, Evusheld is not currently authorised for use in the US. Guidance The Company provides guidance for FY 2023 at CER, based on the average exchange rates through 2022. Total Revenue is expected to increase by a low-to-midsingle-digit percentage Excluding COVID-19 medicines, Total Revenue is expected to increase by a low double-digit percentage Core EPS is expected to increase by a high single-digit to low double-digit percentage While challenging to forecast, Total Revenue from COVID-19 medicines (Vaxzevria, Evusheld and AZD3152, the COVID-19 LAAB15 currently in development) is expected to decline significantly in FY 2023, with minimal revenue from Vaxzevria Total Revenue from China is expected to return to growth and increase by a low single-digit percentage in FY 2023 Collaboration Revenue and Other Operating Income are both expected to increase, driven by continued growth of our partnered medicines, success-based milestones, and certain anticipated transactions Core Operating Expenses are expected to increase by a low-to-midsingle-digit percentage, driven by investment in recent launches and the ungating of new trials The Core Tax Rate is expected to be between 18-22% The Company is unable to provide guidance on a Reported basis because it cannot reliably forecast material elements of the Reported result, including any fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal settlement provisions. Please refer to the cautionary statements section regarding forward-looking statements at the end of this announcement. Currency impact If foreign exchange rates for February to December 2023 were to remain at the average rates seen in January 2023, it is anticipated that FY 2023 Total Revenue and FY 2023 Core EPS would both incur a low single-digit adverse impact versus the performance at CER. The Company's foreign exchange rate sensitivity analysis is provided in Table 17. 2 Table 1: Key elements of Total Revenue performance in Q4 2022 Revenue type Product Sales Collaboration Revenue Total Revenue Therapy areas Oncology CVRM6 R&I V&I18 Rare Disease6 Other Medicines Total Revenue Regions inc. Vaxzevria Emerging Markets China Ex-ChinaEmerging Markets US Europe Established RoW Total Revenue inc. Vaxzevria % Change $m Actual CER 10,798 (6) 2  Decline of 6% (2% increase at CER) due to lower sales of Vaxzevria16  Strong growth in Oncology, CVRM and Rare Disease 409 (20) (19)  $188m for Enhertu (Q4 2021: $60m)  $37m for Tezspire (Q4 2021: $nil)  Milestone of $105m for Lynparza 11,207 (7) 1  Excluding Vaxzevria, Q4 2022 Total Revenue increased by 8% (17% at CER) - see below $m Actual CER 4,046 4 12  Strong performance across key medicines and regions 2,284 12 22  Farxiga up 39% (52% CER), Lokelma up 50% (63% at CER), roxadustat up 61% (83% CER), Brilinta decreased 1% (increased 4% at CER) 1,485 (7) (1)  Growth in Fasenra, Breztri and Saphnelo offset by decline in Pulmicort of 33% (28% at CER) primarily due to the impact of VBP17 implementation in China 1,163 (50) (43)  $734m from Evusheld (Q4 2021: $135m)  $95m from Vaxzevria (Q4 2021: $1,762m) 1,816 4 10  Ultomiris up 52% (62% at CER) as gMG launch and conversion progressed; offset by decline in Soliris  Strensiq up 24% (27% at CER) reflecting strength of patient demand and geographic expansion 412 (2) 12 11,207 (7) 1 $m Actual CER 2,733 (25) (18)  Decline due to lower sales of Vaxzevria (growth rates excluding Vaxzevria shown below) 1,194 (9) 3  Second consecutive quarter of growth at CER 1,538 (35) (29)  Decline due to lower sales of Vaxzevria 4,788 22 22 2,308 (20) (8)  Decline due to lower sales of Vaxzevria 1,378 (11) 8 11,207 (7) 1 Regions exc. Vaxzevria Emerging Markets China Ex-ChinaEmerging Markets US Europe Established RoW Total Revenue exc. Vaxzevria $m Actual CER 2,678 7 18 1,194 (8) 4 1,484 24 33 4,788 24 24 2,268 (12) 1 1,378 4 27 11,112 8 17 Second consecutive quarter of growth at CER Strong growth in Oncology and CVRM $246m from Evusheld in Q4 (Q4 2021: $69m) Growth in Oncology medicines 3 Table 2: Key elements of financial performance in Q4 2022 Metric Reported Reported Core Core change change Total $11,207m -7% Actual $11,207m -7% Actual Revenue 1% CER 1% CER Gross 73% 13pp Actual 77% 3pp Actual margin20 15pp CER 4pp CER R&D $2,625m 2% Actual $2,526m 5% Actual expense 9% CER 12% CER SG&A $4,621m -10% Actual $3,583m 6% Actual expense -3% CER 15% CER Other 29% Actual -11% Actual operating $189m $130m 33% CER -7% CER income21 Operating 10% 12pp Actual 23% -4pp Actual margin 14pp CER -3pp CER Net finance $315m -6% Actual $245m 5% Actual expense stable at CER 9% CER Tax rate -16% n/m 10% -7pp Actual -6pp CER EPS $0.58 n/m $1.38 -17% Actual -5% CER Comments19 Excluding Vaxzevria, Q4 2022 Total Revenue increased by 8% (17% at CER) See Table 1 and the Total Revenue section of this document for further details Increasing mix of sales from Oncology and Rare Disease medicines Decreasing mix of Vaxzevria sales Negative impact in the quarter from currency fluctuations Inventory write downs and manufacturing termination fees relating to Evusheld reduced Gross Profit by $335m in Q4 2022 Mix impact from profit-sharing arrangements (e.g. Lynparza) Reported Gross Margin impacted by unwind of Alexion inventory fair value adjustment + Increased investment in the pipeline Core R&D-to-Total Revenue ratio of 23% (Q4 2021: 20%) Market development activities for recent launches Core SG&A-to-Total Revenue ratio of 32% (Q4 2021: 28%). The year-on-year comparison is impacted by differences in cost phasing during H2 2021 and H2 2022 Reported and Core OOI includes income from sale of the Waltham site See Gross Margin and Expenses commentary above Reported impacted by a reduction in the discount unwind on acquisition-related liabilities The Reported and Core Tax Rates in the quarter reflected IP incentive regimes, geographical mix of profits and adjustments to prior year tax liabilities including several one-time items Variations in the tax rate can be expected to continue quarter to quarter Further details of differences between Reported and Core are shown in Table 12 4 Table 3: Pipeline highlights since prior results announcement Event Medicine Indication / Trial Event Imfinzi +/- Imjudo NSCLC (1st-line) (POSEIDON) Regulatory approval (US, JP) Imfinzi + Imjudo Hepatocellular carcinoma (1st-line) Regulatory approval (JP) (HIMALAYA) Imfinzi Regulatory Lynparza approvals and Enhertu other regulatory actions Enhertu Enhertu Biliary tract cancer (TOPAZ-1) mCRPC (1st-line) (PROpel) HER2-positive breast cancer (2nd-line)(DESTINY-Breast03) HER2-low breast cancer (3rd-line)(DESTINY-Breast04)HER2-positive/HER2-low gastric (2nd-line)(DESTINY-Gastric01,DESTINY-Gastric02) Regulatory approval (EU, JP) Regulatory approval (EU) Regulatory approval (JP) Regulatory approval (EU) Regulatory approval (EU) Calquence CLL22 (ELEVATE-TN) Regulatory approval (JP) Calquence Maleate tablet formulation Regulatory approval (EU) Forxiga HFpEF23 (DELIVER) Regulatory approval (EU, JP) Airsupra Severe asthma (MANDALA/DENALI) Regulatory approval (US) Tezspire Pre-filled pen Regulatory approval (US, EU) Enhertu HER2-mutated NSCLC (2nd-line+) Regulatory submission (EU, JP) Regulatory (DESTINY-Lung01) submissions Calquence CLL (ASCEND) Regulatory submission (CN) or acceptances Beyfortus RSV24 (MELODY/MEDLEY) Regulatory submission (US) Soliris NMOSD25 Regulatory submission (CN) Imfinzi NSCLC (1st-line) (PEARL) Primary endpoint not met capivasertib HR26+/HER2-negative breast cancer Fast Track Designation (US) (1st-line)(CAPItello-291) Orpathys + NSCLC with MET overexpression Fast Track Designation (US) Tagrisso (SAVANNAH/SAFFRON) Major Phase III data readouts Treatment/prevention of acute and other tozorakimab respiratory failure in patients with viral Fast Track Designation (US) developments lung infection (TILIA) Saphnelo Idiopathic inflammatory myopathies Orphan Drug Designation (US) Revision of Emergency Use Evusheld Pre-exposure prophylaxis of COVID-19 Authorisation (US) - Evusheld is not currently authorised in the US until further notice from the FDA27 5 This is an excerpt of the original content. 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