AstraZeneca Inks Deal for Oral Weight Loss Drug, Raises Profit Outlook

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AstraZeneca is set to enter the competitive arena of weight loss medications, signaling a strategic shift amid robust demand for its cancer drugs, leading to an increased profit outlook. The Anglo-Swedish pharmaceutical company recently disclosed a licensing agreement for an oral medicine in the same category as Novo Nordisk’s successful Wegovy drug, which addresses conditions such as diabetes and obesity affecting over a billion people globally.

In its recent financial report, AstraZeneca revealed a notable 6 percent surge in third-quarter revenues. This growth was propelled by the heightened demand for its oncology and rare disease drugs, effectively offsetting the declining sales of COVID-19 vaccines. Consequently, the company has adjusted its expectations, anticipating a low-teens percentage increase in total revenue (excluding COVID-19 drugs), surpassing its earlier forecast of a low double-digit rise. Core earnings per share are also projected to witness a surge, potentially reaching a high double-digit percentage increase, an upgrade from the previous best-case scenario of a low double-digit rise.

Following these developments, AstraZeneca’s stock experienced a 2.7 percent rise in Thursday morning trading.

AstraZeneca’s agreement with China’s Eccogene carries a substantial worth of up to $2.01 billion. Eccogene will receive an initial payment of $185 million, securing exclusive global rights (excluding China) for the development and marketing of the weight loss drug. An additional $1.83 billion is contingent on achieving specified milestones.

The pharmaceutical landscape for weight loss treatments is intensifying, evidenced by Novo Nordisk’s Wegovy witnessing a nearly 50 percent surge in shares this year. Regulatory approvals on both sides of the Atlantic for Eli Lilly’s injectable diabetes medication, positioned as a weight loss treatment, present direct competition to Wegovy.

AstraZeneca’s weight loss medicine, envisaged in pill form, could position the company strongly in this burgeoning market. Although the molecule is currently undergoing early clinical trials, promising results have emerged, indicating encouraging reductions in blood sugar and body weight, coupled with a favorable safety and tolerability profile.

Sharon Barr, Executive Vice President for Biopharmaceutical Research and Development at AstraZeneca, expressed optimism about the potential of the drug, suggesting it could provide alternatives to existing injectable therapies.

Excluding products related to COVID-19, third-quarter sales at AstraZeneca recorded a substantial 13 percent growth, reaching $11.49 billion, surpassing estimates. This positive outcome was particularly driven by the performance of oncology and rare disease drugs, both strategic focus areas for the company.

Pascal Soriot, the Chief Executive Officer, emphasized AstraZeneca’s sustained robust growth trajectory. The decision to revise the guidance upward was attributed to the positive momentum witnessed throughout the year.

In the third quarter, AstraZeneca observed a 17 percent growth in oncology drug sales and a 16 percent increase in cardiovascular drug sales. However, sales of its COVID-19 vaccine and antibody treatment reported zero revenue during this period, a notable contrast to the $716 million recorded in the corresponding period in 2022.