Slide 1: Fixed-Income Investor Update August 2018
Fixed - Income Investor Update August 2018
Slide 2: Forward-looking statements cautionary statement
In order, among other things, to utilise the 'safe harbour' provisions of the US Private Securities Litigation Reform Act 1995 , we are providing the following cautionary statement : this document contains certain forward - looking statements with respect to the operations, performance and financial
Slide 3: Registration statement and non-GAAP measures notice
We have filed a registration statement (including a prospectus supplement and accompanying prospectus) with the Securities and Exchange Commission for the offering to which this presentation relates . Before you invest, you should also read the prospectus in that registration statement, the prelimin
Slide 4: Transaction highlights & key messages
Transaction highlights & key messages
Slide 5: Transaction highlights
• Issuer: AstraZeneca PLC • Type of offering: SEC - registered • Ranking: Senior, Unsecured • Size: $ Benchmark • Tenor: 5 year fixed and/or floating, long 10 year (Jan 2029), 30 year • Expected ratings: A3 (negative) / BBB+ (stable) • Use of Proceeds: General Corporate Purposes (which may include t
Slide 6: Key messages
6 Key messages Our strategic business focus is paying off – return to growth on track Pipeline continues to deliver – trial readouts and regulatory approvals Continued strong focus on cash generation and cost discipline Strong, investment grade credit rating – a Board priority
Slide 7: Strategy Update
AstraZeneca What science can do Strategy Update ee
Slide 8: Strategic business focus is paying off
The main therapy areas accelerated growth 8 Strategic business focus is paying off Product Sales growth (CER 1 ) Q2 2018 H1 2018 Oncology, New CVRM 2 , Respiratory +19% +14% Other - 32% - 25% 1. All financial performance metrics are shown using Core reporting metrics and at constant exchange rates (
Slide 9: Sales momentum continued to improve
The sales momentum continued to improve 9 2018: return to sales growth on track 2018: low single - digit growth in Product Sales Lynparza ongoing launch of tablet in ovarian and breast cancer Tagrisso ongoing launch in 1st - line lung cancer Imfinzi ongoing launch in unresect., sIII lung cancer Bril
Slide 10: New medicines continued forward
>$1bn in additional sales and growth of 69% in H1 2018 10 Product Sales: new medicines continued forward Absolute values at CER. 0 50 100 150 200 250 300 350 Tagrisso Imfinzi Farxiga Lynparza Brilinta Fasenra Calquence Bevespi >$1bn Total additional sales from new medicines compared to H1 2017 $m
Slide 11: Business & financials
Business & financials Product Sales declined by 2% in H1 2018 and only by 1% in the second quarter • Strong performance of new medicines 1 (+69%) and China • Offset by divestments (~2%) and EU/JP Crestor generics Total Revenue declined by 5% New medicines 1 continued forward: >$1bn additional sales
Slide 12: Late-stage pipeline Q2 2018 highlights
Late - stage pipeline Q2 2018 highlights 12 The pipeline continued to deliver 1. Non - small cell lung cancer. 2. Cardiovascular outcomes trial. 3. Chronic obstructive pulmonary disease. Status since the last results announcement on 18 May 2018. Pipeline news Oncology • Lynparza breast cancer Approv
Slide 13: Late-stage pipeline news flow in 2018 and 2019
Unlocking and realising the potential of new medicines 13 Late - stage pipeline news flow in 2018 and 2019 H2 2018 H1 2019 H2 2019 Regulatory decision Tagrisso - lung cancer 1L (JP) Imfinzi - unresectable, Stage III NSCLC (EU) moxetumomab pasudotox - hairy cell leukaemia 3L (US) Bydureon autoinjecto
Slide 14: Focusing on three therapy areas
14 Focusing on three therapy areas Respiratory Cardiovascular, Renal & Metabolism Oncology
Slide 15: Global performance impacted by Crestor EU/JP and divestments
Global performance impacted by Crestor EU/JP and divestments 15 Product Sales: Oncology and China performed strongly Product Sales values at actual exchange rates; changes at CER and for H1 2018 , unless otherwise stated. Q2 2018 $m % change % Product Sales H1 2018 $m % change % Product Sales Produc
Slide 16: Oncology: new medicines drive strong performance
New medicines continued to drive strong performance 16 Oncology • Oncology +37%; now 27% of total Product Sales • New medicines contributed $0.7bn in additional sales vs. H1 2017 • Lynparza : accelerated growth globally; promising launch in Japan • Tagrisso : sustained very high growth; increasing u
Slide 17: New CVRM: Brilinta and Farxiga results
Brilinta +18% : Continued double - digit growth across all major regions Farxiga +36% • US (+29%); increased market share from contract gains; overall market growth slowing • Ex - US (58% of total; increasing) Strong volume - driven growth continued, e.g. Europe (+28%), Emerging Markets (+59%) Bydur
Slide 18: Respiratory: Fasenra and Pulmicort offsetting Symbicort
Improving performance; Fasenra and Pulmicort offsetting Symbicort 18 Respiratory Chart legend: Symbicort Pulmicort Fasenra Others Absolute values at actual exchange rates; changes at CER and for H1 2018, unless otherwise stated. US $67m • Very encouraging launch • Leading novel biologic (within IL -
Slide 19: Emerging Markets
• Mid to high single - digit growth continued Growth ex - China reduced by divestments (7 - 8% impact) and general economic conditions in Russia • Oncology +37% : Tagrisso ($159m) now second - biggest Oncology medicine. Hormone - receptor medicines continued growth, with Faslodex leading • New CVRM
Slide 20: Financial update
AstraZeneca? What science can do Financial update
Slide 21: Reported Profit & Loss
21 Reported Profit & Loss 1. Percentage points. 2. Includes Distribution Expense. Absolute values at actual exchange rates; changes at CER. Gross Margin reflects Gross Profit derived from Product Sales, divided by Product Sales. H1 2018 $m % change at CER % Total Revenue Q2 2018 $m % change at CER %
Slide 22: Core Profit & Loss
22 Core Profit & Loss 1. Includes Distribution Expense. Absolute values at actual exchange rates; changes at CER. Gross Margin reflects Gross Profit derived from Product Sales, divided by Product Sales. H1 2018 $m % change at CER % Total Revenue Q2 2018 $m % change at CER % Total Revenue Total Reven
Slide 23: Merck collaboration becoming a stable source of income
Merck collaboration becoming a stable source of income 23 Externalisation Revenue • No initial Externalisation Revenue in Q2; $102m from partnering legacy medicines in H1 • Ongoing Externalisation Revenue $216m, mainly from Merck collaboration ( Lynparza milestones total $170m, including first sales
Slide 24: Operating expenses remain in sharp focus
• Core R&D costs declined by 5% • Maintained activity level; continued benefit from productivity improvements and Merck collaboration • FY 2018: anticipated to be in the range of a low single - digit percentage decline to stable • Core SG&A costs increased by 7% • Lower baseline in H1 2017; ongoing
Slide 25: FY 2018 guidance reiterated; unchanged capital allocation
25 FY 2018 guidance reiterated; unchanged capital allocation Product Sales A low single - digit percentage increase Core EPS $3.30 to $3.50 Guidance at CER. Capital allocation priorities Immediately earnings - accretive, value - enhancing opportunities Progressive dividend policy Strong, investment
Slide 26: Additional commentary – outside of guidance
26 Additional commentary – outside of guidance Guidance at CER. • The sum of Externalisation Revenue and Other Operating Income & Expense is anticipated to decline vs. the prior year • Core R&D costs in FY 2018 are anticipated to be in the range of a low single - digit percentage decline to stable •
Slide 27: Liquidity, debt and rating summary
27 Liquidity, debt and rating summary • Strong liquidity at 30 June 2018 » Group cash and investments of $3.9bn » Undrawn $3bn committed bank facilities (mature in 2022) • Access to diverse sources of funding through US and European debt programme, USCP programme • The Board continues to target a st
Slide 28: Smooth bond maturity profile with ten-year average life
28 Smooth bond maturity profile with ten - year average life 1 FX converted at 30 June 2018 spot rates (USD/EUR 0.8596; USD/GBP 0.7631) Debt Maturity Profile at 30 June 2018 1 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2018 2019 2020 2021 2022 2023 2024 2025 2027 2028 2031 2037 2042 2045
Slide 29: Net debt position
29 Net debt position 30 - Jun - 18 $m 31 - Dec - 17 $m Gross debt (19,667) (17,807) Cash & cash equivalents 2,978 3,324 Other investments 881 1,300 Net derivative financial instruments 1 465 504 Closing net debt (15,343) (12,679) 1. Net debt is a non - GAAP measures. The equivalent GAAP measure to n
Slide 30: Prudent treasury risk-management policies
30 Prudent treasury risk - management policies The Company operates with a centralised Treasury structure so that key Treasury risks are managed at a Group level. Investment policy • Security and liquidity • Financial counterparty limits Foreign Exchange Policy • Foreign Exchange exposures managed c
Slide 31: AstraZeneca: What science can do
AstraZeneca? What science can do
Slide 32: Key messages
32 Key messages Our strategic business focus is paying off – return to growth on track Pipeline continues to deliver – trial readouts and regulatory approvals Continued strong focus on cash generation and cost discipline Strong, investment grade credit rating – a Board priority
Slide 33: Fixed-Income
Fixed - Income Investor Update August 2018
Slide 34: Appendix
AstraZeneca What science can do Appendix
Slide 35: Geographic platform for growth
Geographic platform for growth 35 Emerging Markets US 31% of Product Sales Europe 22% of Product Sales Rest of World Established (ex - Japan) 4% of Product Sales Japan 9% of Product Sales Emerging Markets (ex - China) 15% of Product Sales China 19% of Product Sales H1 2018 Regional Product Sales as
Slide 36: Three sustainability priorities
36 Three sustainability priorities • Promote awareness and prevention of non - communicable diseases to reduce global burden and cost • Build capacity to help improve healthcare infrastructure and remove barriers to medical treatment • Make our medicines available and more affordable on a commercial
Slide 37: H1 2018 Reconciliation of Reported to Core Financial Measures
Reported Restructuring Intangible Asset Amortisation & Impairments Diabetes Alliance Other 1 Core 2 $m $m $m $m $m $m Gross Profit 8,187 55 92 ‒ ‒ 8,334 Distribution Expense (165) ‒ ‒ ‒ ‒ (165) R&D Expense (2,641) 58 25 ‒ ‒ (2,558) SG&A Expense (5,008) 84 695 213 (138) (4,154) Other Operating Income
Slide 38: Q2 2018 Reconciliation of Reported to Core Financial Measures
Reported Restructuring Intangible Asset Amortisation & Impairments Diabetes Alliance Other 1 Core 2 $m $m $m $m $m $m Gross Profit 4,413 23 47 ‒ ‒ 4,213 Distribution Expense (84) ‒ ‒ ‒ ‒ (84) R&D Expense (1,362) 31 13 ‒ ‒ (1,318) SG&A Expense (2,551) 48 346 106 (75) (2,126) Other Operating Income 61
Slide 39: Lynparza: expanding benefits to more patients
Expanding benefits to more patients 39 Lynparza • 1st - line ovarian cancer ( BRCA m) data presentation in H2 2018; regulatory submission soon • China first regulatory decision expected in H2 2018 in ovarian cancer • EU breast cancer regulatory decision expected in H1 2019 • US +198% Tablet formulat
Slide 40: Tagrisso: strong 2nd-line business; 1st-line launches
Strong 2nd - line business; step change from 1st - line launches 40 Lung cancer: Tagrisso • US +89% Continued momentum in 2nd line with a boost from 1st - line launch • Europe +63% Continued 2nd line momentum; early 1st - line launches • Japan +11% Sequential quarterly growth back following intense
Slide 41: Imfinzi: fast uptake in unresectable Stage III NSCLC
Continued fast uptake in unresectable, Stage III NSCLC (PACIFIC) 41 Lung cancer: Imfinzi • Product Sales ~doubled to $122m in Q2; total $184m in H1 Lung cancer the majority of sales; very limited use in bladder cancer • Additional approvals obtained Japan, Canada, Switzerland, India, Brazil • First
Slide 42: Haematology: Calquence and moxetumomab
Emerging franchise; initially in smaller indications 42 Haematology: Calquence and moxetumomab • Product Sales $20m, US only • Encouraging early uptake Maintained ~1/4 of new - patient starts in approved indication • Expanding patient benefit First ex - US regulatory decision expected in H2 2018 • L