NEW YORK – AstraZeneca is strengthening its approach to compliance in China and worldwide as Chinese authorities pursue criminal investigations of current and former employees in several matters involving the company's business in the country, including an alleged scheme involving falsifying genetic testing results to secure reimbursement for Tagrisso (osimertinib), a treatment for EGFR-mutant non-small cell lung cancer.
In a call Tuesday morning to discuss the firm's third quarter financial results, AstraZeneca CEO Pascal Soriot said, "We are trying to be as transparent as we can, but we have very limited information." Soriot said it is too early to judge whether the investigations will affect AstraZeneca's product revenues from China. Meanwhile, the company is taking a step toward its goal to achieve $80 billion in total revenue by 2030 by making a $3.5 billion investment to bolster product manufacturing in the US.
Last week, the Chinese media outlet Caixin reported that some sales representatives for Tagrisso were under investigation by China's National Healthcare Security Administration for fraudulently changing genetic test results for patients with EGFR-mutant NSCLC to make them eligible to receive Tagrisso. At the time, in 2021, only second-line patients with T790M EGFR mutations were eligible for Tagrisso. AstraZeneca did not specify the type of mutations patients implicated in the scheme had or which line of treatment they were on. AstraZeneca CFO Aradhana Sarin said in a call with sell-side analysts last week that the company estimates about 100 ex-employees have been sentenced in relation to the fraud scheme, but that no current or former senior China executives are being investigated.
In a separate set of investigations, Chinese authorities have made allegations against current and past AstraZeneca employees for illegally importing certain oncology medicines into mainland China and inappropriately collecting patient data. That investigation involves two current and two former senior executives, that the company did not name. Lastly, Leon Wang, AstraZeneca's executive VP in China, has been under investigation and is being detained in China for unknown reasons, according to AstraZeneca.
"We are not privy to the details of any of these investigations," Soriot said. "We will cooperate fully as we have in the past." Thus far, according to Sarin, the company has responded to requests for data from the individual investigations but has not been asked to provide any testimony.
As a result of these investigations, AstraZeneca is making some improvements to its compliance systems, including monitoring internal data such as reports and emails, and requiring employees to use those systems. The company has also increased the number of compliance officers in the field, in the hopes that those officers will be able to identify any compliance problems early. Soriot said the drugmaker will rotate sales directors so they don't remain too long in one place. "If you stay in the same place, you can actually be impacted in your behavior," he said.
China is an important market for AstraZeneca. For the first nine months of the year, product sales in the country were $5.05 billion, comprising 13 percent of its $39.18 billion in total revenues.
During the call, AstraZeneca executives also discussed the company's overall Q3 financial performance, as well as additional oncology product revenues. For the three months ending Sept. 30, the firm's total revenue was $13.57 billion, an 18 percent increase from $11.49 billion in Q3 2023, beating analysts' average revenue estimate of $13.09 billion. At constant exchange rates, the firm's total revenue increased 21 percent during this period.
Noting growth in the company's revenues across regions, particularly in the US, Soriot said AstraZeneca will invest $3.5 billion to expand manufacturing in the US. The initiative will include an R&D center in Cambridge, Massachusetts, a biologics manufacturing facility in Maryland, a specialty product manufacturing facility in Texas, and expanded cell therapy manufacturing capacity on the East and West Coasts.
Despite the timing of the announcement, Sarin said AstraZeneca has been planning to expand its manufacturing capabilities for several years and that the move was driven by the company's overall momentum, not the outcome of US presidential election. However, Soriot expressed optimism over the election of President-elect Donald Trump. "The economy should continue to grow strongly in the US next year and the year after," he said. "A strong economy will support strong healthcare, which of course will also support the delivery of medicines."
Oncology products contributed $5.57 billion to AstraZeneca's Q3 2024 revenues, increasing 19 percent compared to the year-ago period.
Tagrisso recorded $1.67 billion in sales in Q3 2024, a 14 percent increase compared to the same period in 2023.
The drugmaker reported $125 million in Q3 revenue for the AKT inhibitor Truqap (capivasertib). The US Food and Drug Administration approved Truqap as a treatment for patients with hormone receptor (HR)-positive, HER2-negative advanced or metastatic breast cancers bearing alterations in PIK3CA, AKT1, or PTEN in November 2023, after Q3 2023.
The HER2-targeted breast cancer therapy Enhertu (trastuzumab deruxtecan), which AstraZeneca markets with Daiichi Sankyo, brought in $510 million in Q3 2024, an increase of 50 percent over the year-ago period.
In Q3 2024, sales of the PARP inhibitor Lynparza (olaparib) increased 11 percent from Q3 2023, to $778 million. AstraZeneca, in partnership with Merck, markets Lynparza in several tumor types characterized by mutations in BRCA1/2 and other homologous recombination repair genes.
Over this same period, sales of AstraZeneca's PD-L1 inhibitor Imfinzi (durvalumab) increased 13 percent to $1.20 billion.
AstraZeneca executives also provided updates on the firm's clinical pipeline. The firm said on Tuesday that it has submitted a biologics license application (BLA) to the FDA, seeking accelerated approval for datopotamab deruxtecan (Dato-DXd) as a treatment for patients with locally advanced or metastatic EGFR-mutated NSCLC, who have previously received systemic therapies, including an EGFR-targeted therapy. At the same time, based on FDA's feedback, AstraZeneca withdrew a BLA it previously submitted seeking approval for Dato-DXd in an all-comer nonsquamous NSCLC population.
The earlier BLA submission contained data from the Phase III TROPION-Lung01 trial, in which median overall survival was numerically higher, 12.9 months, for patients on Dato-DXd, compared to 11.8 months for those on docetaxel, but the difference wasn't statistically significant. "In patients with nonsquamous NSCLC, overall survival improvement was observed regardless of the presence of actionable genomic alterations," AstraZeneca said In a statement announcing these results in September.
However, after discussing this data with the FDA, the firm decided to withdraw its BLA seeking approval for Dato-DXd in the nonsquamous NSCLC population and submit a new BLA seeking approval in the EGFR-mutated NSCLC population. The latest BLA contains data from the Phase II TROPION-Lung05 trial and is supported by data from TROPION-Lung01 and the Phase I TROPION-PanTumor01 trial, according to AstraZeneca.
In TROPION-Lung05, AstraZeneca enrolled patients with advanced or metastatic NSCLC bearing actionable genomic alterations who have been previously treated with a platinum-containing therapy and one or more lines of targeted therapy and tracked their objective response rate, other outcomes, and safety on Dato-DXd. There was a "pronounced benefit [from Dato-DXd] for patients with an EGFR mutation," according to Susan Galbraith, AstraZeneca's executive VP of Oncology R&D.
The company said it will present new data from a pooled analysis comprising patients with previously treated EGFR-mutated NSCLC enrolled in TROPION-Lung05 and TROPION-Lung01, at the European Society for Medical Oncology Asia 2024 Congress in December. AstraZeneca does not yet have an estimate for when the FDA will make a decision on this BLA, according to Galbraith.
In Q3 2024, AstraZeneca posted a net profit of $1.43 billion, or $0.92 per share, compared to a net profit of $1.38 billion, or $0.89 per share, in Q3 2023. The consensus Wall Street EPS estimate was $1.03.
As of June 30, AstraZeneca had $4.93 billion in cash and investments.
The company updated its 2024 guidance for total revenue and core EPS, and now expects both to grow by a high-teens percentage at constant exchange rates. It was previously expecting a low mid-teens percentage increase in 2024 revenue and core EPS.