AstraZeneca profit beat, bullish tone ease worries over drug pipeline

By Pushkala Aripaka and Maggie Fick

July 27 (Reuters) - AstraZeneca stood by its annual and long-term forecasts on Monday, expressing confidence that recent trial setbacks had not undermined its long-term prospects as second-quarter profit beat market expectations.

Strong demand for cancer and rare disease drugs continues to drive growth, but investors are keen for signs that the pharmaceutical giant's 2030 revenue target is not under threat after an unexpected trial failure this month.

AstraZeneca aims to reach $80 billion in annual revenue by 2030, a target JPMorgan analysts said remains achievable after second-quarter profit topped analysts' predictions and sales were as expected.

"We're building a company that will not just deliver on its 2030 ambition, but continue to grow well into the next decade. We have the science, we have the pipeline, and we have the team to make this happen," CEO Pascal Soriot told journalists.

PHARMACEUTICAL DIVERSITY

AstraZeneca's diversity in therapeutic areas and approved drugs and broad success in clinical trials set it apart from its peers. But investor expectations of continuing advancements were dealt a blow by setbacks on nerve drug Wainua and experimental breast cancer treatment camizestrant.

"Biology is not mathematics. It's not as predictable," Soriot said. "This is why we run very expensive programmes to know the answer to very important medical questions."

AstraZeneca said it began six Phase III trials of oral GLP-1 candidate elecoglipron in obesity and type 2 diabetes in the second quarter, making it one of its largest late-stage trial programmes, as it seeks to take on established players.

Upcoming results from two late-stage cancer studies will be closely watched as AstraZeneca also prepares for more than 20 Phase III readouts over the next 18 months.

"Growth is clearly moderating, and investors will stay laser focused on the remaining big oncology trial readouts later this year," eToro analyst Adam Vettese said.

AstraZeneca separately detailed the outcomes of a different late-stage gastric cancer trial and another study of rare-disease drug Ultomiris.

ASTRAZENECA MAINTAINS 2026 OUTLOOK

AstraZeneca still expects 2026 core earnings per share to increase by a low double-digit percentage at constant currency rates, with total revenue rising at a rate in the mid-to-high-single digits. It reported sales and profit growth of about 8% and 11%, respectively, last year.

Core earnings for the June quarter jumped to $2.63 per share, helped by lower taxes, while total revenue rose 5% to $15.38 billion, compared to a company-compiled consensus of $2.48 per share and revenue of $15.39 billion, respectively.

Oncology and rare diseases sales rose 15% and 8%. Revenue from China, its second-biggest market, fell 13%, hurt by generic competition and policy changes.

AstraZeneca raised the sales potential of experimental respiratory drug tozorakimab to more than $5 billion versus previous expectations of $3 billion.

Finance chief Aradhana Sarin also said AstraZeneca's supply and distribution costs had increased due to the Iran war, but did not give details.

AstraZeneca shares rose 1.7% by 0925 GMT, though they are down about 7% this year, trailing rival GSK. The stock has more than quadrupled in price under Soriot's 14-year tenure.

(Reporting by Pushkala Aripaka in Bengaluru and Maggie Fick in London, Raechel Thankam Job and Sri Hari N S; Editing by Mrigank Dhaniwala, Kirsten Donovan and Joe Bavier)