AstraZeneca 6-K 2006
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
to Rule 13a-16 or 15d-16 of
For July 2006
Commission File Number: 001-11960
15 Stanhope Gate, London W1K 1LN, England
INDEX TO EXHIBITS
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AstraZeneca And Abbott To Co-Develop And Co-Market A Single-Pill,
AstraZeneca and Abbott announced today a collaboration to co-develop and market a combination treatment that will target three important blood lipids - LDL ("bad" cholesterol), HDL ("good" cholesterol), and triglycerides in one single pill as part of a comprehensive treatment regimen for mixed lipid disorders.
The fixed-dose combination therapy will be co-developed for the U.S. market based on Abbotts proprietary, next-generation fenofibrate (ABT-335) currently in Phase III clinical trials and AstraZenecas marketed statin, CRESTOR® (rosuvastatin calcium).
In parallel, a combination product based on Abbotts currently marketed fibrate TriCor® and AstraZenecas CRESTOR will also be evaluated. Final selection between the two programmes will be made based upon data generated from the initial studies.
ABT-335 is part of a class of medications called fibrates, which have been shown to raise HDL cholesterol and reduce triglycerides, a form of fat or lipid obtained through food sources. CRESTOR is part of a class of medications called statins, and has been shown to reduce LDL and raise HDL cholesterol. This combination could potentially address LDL and HDL cholesterol and triglycerides simultaneously in a single pill.
More than 100 million Americans suffer from lipid disorders. Of this number, 38 million American adults have LDL, HDL and triglycerides at levels which increase the risk for coronary artery disease and stroke. Patients with mixed dislipidaemia are expected to become a more prominent segment of the dyslipidaemic population due to the increased prevalence of metabolic syndrome and diabetes.
The overall intention of the agreement is for the two companies broadly to share development costs and profits over the duration of the collaboration. Abbott will deliver the jointly designed clinical trial programme and will also be responsible for regulatory filing of the new combination therapy. AstraZeneca will hold the New Drug Application (NDA). Following successful completion of the clinical programme, a regulatory application is anticipated for submission to the FDA in 2009.
The effectiveness of the agreement is subject to the satisfactory completion of certain conditions, including obtaining customary Hart-Scott-Rodino antitrust clearance.
"We're excited by the opportunity this collaboration brings to serve an important area of patient need," said Tony Zook, Executive Vice President North America, AstraZeneca. This represents an important further step in broadening the full, long-tem potential of CRESTOR for the treatment of lipid disorders.
"Treatment guidelines emphasize the need to manage three important lipids by lowering bad cholesterol and triglycerides and increasing good cholesterol. Increasing evidence shows that addressing these three key lipid targets helps to protect patients from heart disease, said Eugene Sun, M.D., Vice President, Global Pharmaceutical Clinical Development, Abbott. This collaboration has the potential to provide physicians and patients with the first statin and fibrate combination in a single pill to simplify the comprehensive treatment of lipids."
AstraZeneca is a major international healthcare business engaged in the research, development, manufacture and marketing of prescription pharmaceuticals and the supply of healthcare services. It is one of the world's leading pharmaceutical companies with healthcare sales of $23.95 billion and leading positions in sales of gastrointestinal, cardiovascular, neuroscience, respiratory, oncology and infection products. AstraZeneca is listed in the Dow Jones Sustainability Index (Global) as well as the FTSE4Good Index.
5 July, 2006
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
Further to AstraZenecas announcement on 30 June 2006 regarding its intention to exercise its rights pursuant to the provisions of Schedule 2 of the Interim Regulations to acquire compulsorily, on the same terms as the Offer, the remaining CAT Shares (including shares underlying CAT ADSs) in respect of which the Offer has not been accepted, AstraZeneca announces the despatch today of compulsory acquisition notices to CAT Shareholders who have not accepted the Offer.
CAT Shareholders who wish to accept the Offer and who have not already done so should, if their CAT Shares are held in certificated form, complete and return their Form of Acceptance as soon as possible in accordance with the instructions printed on it. CAT Shareholders who hold CAT Shares in uncertificated form and who have not yet accepted the Offer are reminded to follow the CREST procedure set out in the Offer Document.
Defined terms used in this announcement have the same meanings as in the Offer Document dated 23 May 2006.
This announcement is for informational purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to the Offer or otherwise. This announcement also does not constitute a Solicitation / Recommendation Statement under the rules and regulations of the US Securities and Exchange Commission (the "SEC"). The Offer is being made solely by means of the Offer Document and the Form of Acceptance accompanying the Offer Document, which contain the full terms and conditions of the Offer, including details of how the Offer may be accepted. In the United States, AstraZeneca has filed a Tender Offer Statement containing the Offer Document and other related documentation with the SEC on Schedule TO and CAT has filed a Solicitation/Recommendation Statement with the SEC on Schedule 14D-9. Free copies of the Schedule TO, the Schedule 14D-9 and the other related documents filed by AstraZeneca or CAT in connection with this Offer are available on the SECs website at www.sec.gov. The Offer Document and Acceptance Forms accompanying the Offer Document have been made available to all CAT Shareholders at no charge to them. CAT Shareholders are advised to read the Offer Document and the accompanying Acceptance Forms as they contain important information. CAT Shareholders in the United States are also advised to read the Tender Offer Statement and the Solicitation/Recommendation Statement as they contain important information.
Goldman Sachs International, which is authorised and regulated by the Financial Services Authority, is acting exclusively for AstraZeneca and no one else in connection with the Offer and will not be responsible to anyone other than AstraZeneca for providing the protections afforded to clients of Goldman Sachs International or for providing advice in relation to the Offer or any other matters referred to in this announcement.
The availability of the Offer to CAT Shareholders who are not resident in and citizens of the United Kingdom or the United States may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. Further details in relation to overseas shareholders are contained in the Offer Document.
The Loan Notes which will be issued pursuant to the Loan Note Alternative have not been, and will not be, listed on any stock exchange and have not been, and will not be, registered under the Securities Act or under any relevant laws of any state or other jurisdiction of the United States, nor have clearances been, nor will they be, obtained from the securities commission or similar authority of any province or territory of Canada and no prospectus has been, or will be, filed, or registration made, under any securities law of any province or territory of Canada, nor has a prospectus in relation to the Loan Notes been, nor will one be, lodged with, or registered by, the Australian Securities and Investments Commission, nor have any steps been taken, nor will any steps be taken, to enable the Loan Notes to be offered in compliance with applicable securities laws of Japan. Accordingly, unless an exemption under relevant securities laws is available, the Loan Notes may not be offered, sold, re-sold or delivered, directly or indirectly, in, into or from the United States or any other Loan Note Restricted Jurisdiction in which an offer of Loan Notes would constitute a violation of relevant laws or require registration of the Loan Notes, or to or for the account or benefit of any US person or resident of any other Loan Note Restricted Jurisdiction.
Unless otherwise determined by AstraZeneca and permitted by applicable law and regulation, subject to certain exemptions, the Offer will not be capable of acceptance from or within a Restricted Jurisdiction. Accordingly, copies of this announcement must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction and persons receiving this announcement (including custodians, nominees and trustees) should observe these restrictions and must not mail or otherwise distribute this announcement in, into or from any such jurisdictions.
AstraZeneca Submits an NDA
For Sustained Release Formulation SEROQUEL SRTM
AstraZeneca today announced the submission of a New Drug Application (NDA) to the US Food and Drug Administration for a sustained release (SR) once-daily formulation of SEROQUEL for the treatment of patients with schizophrenia. The clinical trials to support the US submission of SEROQUEL SRTM used a short titration period aimed at achieving a therapeutically effective dose by the second day of treatment. The Company also expects to make a SEROQUEL SRTM filing in the European Union towards the end of 2006. The SR formulation has patent protection to 2017.
SEROQUEL® (quetiapine fumarate) has a well-established safety and efficacy profile and to date over 16 million people have been treated worldwide. SEROQUEL® has been licensed for the treatment of schizophrenia since 1997 and it is available in 85 countries for the treatment of this condition. SEROQUEL is also licensed in 73 countries for the treatment of mania associated with bipolar disorder. Following the recent regulatory submissions based on the BOLDER studies in bipolar depression, SEROQUEL is set to become the first medication to offer a single treatment effective at both poles of bipolar disease (depression and mania).
SEROQUEL is the number one prescribed atypical antipsychotic in the United States, with global sales of almost $2.8 billion in 2005.
Tuesday 18th July 2006
AstraZenecas SYMBICORT® (budesonide/formoterol)
AstraZeneca today announced that the U.S. Food and Drug Administration (FDA) has approved SYMBICORT® (budesonide/formoterol) for the maintenance treatment of asthma in patients age 12 and older.
SYMBICORT is a twice-daily asthma therapy combining budesonide, an inhaled corticosteroid, and formoterol, a rapid and long-acting beta2-agonist into one inhaler. SYMBICORT will be available in a pressurized metered dose inhaler (pMDI), the most commonly used and prescribed delivery device in the U.S. market. The United States is the first country where SYMBICORT will be available in this type of device. The FDA has approved two dose strengths for SYMBICORT, 80/4.5 and 160/4.5 mcg of budesonide and formoterol, respectively.
We are very pleased that the FDA has approved SYMBICORT in the United States, said David Brennan, Chief Executive Officer, AstraZeneca. Millions of Americans suffer from asthma and the availability of SYMBICORT affords them a new opportunity to achieve better asthma control.
Combination therapy, specifically adding long-acting inhaled beta-agonists to inhaled corticosteroids for long-term control and prevention of symptoms in moderate and severe-persistent asthma is recommended by National Asthma Education and Prevention Program (NAEPP) of The National Institutes of Health (NIH).
The SYMBICORT submission was based on 27 Phase I, II, and III trials designed to assess the efficacy and safety of SYMBICORT in a metered dose inhaler. The approved indication is based on data from two pivotal double blind, placebo-controlled, 12-week trials involving 1,076 patients in the United States, age 12 and over. These studies showed that both dosage strengths of SYMBICORT produced a greater improvement in lung function compared to the same doses of budesonide or formoterol administered alone or placebo. In addition, these studies demonstrated a more rapid improvement in lung function compared to budesonide and placebo. Significant improvement in lung function occurred within 15 minutes of beginning
treatment with Symbicort. SYMBICORT is not indicated for the relief of acute bronchospasm.
AstraZeneca plans to launch SYMBICORT in the US in mid 2007.
Asthma is a reversible obstructive lung disease caused by increased reaction of the airways to various stimuli. It is a serious chronic medical condition and can be life-threatening if not properly managed. In 2002, the Centers for Disease Control estimated that nearly 20 million Americans had asthma, and nearly 12 million of these had an attack or episode during the previous year. Despite the availability of many treatments in the United States to treat adults with asthma, the disease is still poorly controlled. Studies have shown that patients experience emergency department (ED) visits, hospitalizations, or attacks at a steady rate. Additionally, asthma patients who have experienced an asthma attack are twice as likely to experience additional exacerbations as other patients. The annual direct healthcare cost of the disease in the US is approximately $10.1 billion. Indirect costs (e.g., lost productivity due to missed days at school or work) add another $8.2 billion, for a total cost of $18.3 billion.
SYMBICORT received European Mutual Recognition for the treatment of asthma in December 2000 and is currently approved in over 90 countries and has reached more than 5 million patient years outside the United States.
AstraZeneca is a major international healthcare business engaged in the research, development, manufacture and marketing of prescription pharmaceuticals and the supply of healthcare services. It is one of the world's leading pharmaceutical companies with healthcare sales of $23.95 billion and leading positions in sales of gastrointestinal, cardiovascular, neuroscience, respiratory, oncology and infection products. In the United States, AstraZeneca is a $10.77 billion healthcare business with more than 12,000 employees. AstraZeneca is listed in the Dow Jones Sustainability Index (Global) as well as the FTSE4Good Index.
For more information about AstraZeneca, please visit www.astrazeneca.com
July 22, 2006
AstraZeneca PLC appoints new Non-Executive Director
AstraZeneca today announced that John Varley is to join the Board of Directors as a Non-Executive Director with immediate effect. John Varley is the Group Chief Executive of Barclays Bank PLC. Louis Schweitzer, Chairman of AstraZeneca, said, I am delighted that John Varley has agreed to join us. His extensive commercial and financial expertise will add considerable benefit to the work of the Board.
John Varley will become a member of the Remuneration Committee and it is expected that he will become Chairman of that Committee when Sir Peter Bonfield steps down as a Director at the Annual General Meeting in April 2007. It is also intended that Michele Hooper, a Non-Executive Director of AstraZeneca since 2003, will become the Senior Independent Director, in succession to Sir Peter, at that time.
26 July 2006
Biographical details of John Varley
John Varley, 50, has been the Group Chief Executive of Barclays Bank PLC since 2004, having joined the Corporate Finance Department of Barclays Merchant Bank in 1982. He has held a number of senior positions with the bank during his career including Chairman of the Asset Management Division 1995-1998; Chief Executive, Barclays Retail Financial Services 1998-2000; and Group Finance Director 2000-2003. He was appointed as an Executive Director of Barclays Bank PLC in 1998.
John Varley is also Chairman of Business Action on Homelessness, President of the Employers Forum on Disability and a member of the International Advisory Panel of the Monetary Authority of Singapore.
A strong second quarter, with sales up 10 percent and Earnings per Share up
*Includes $109 million in other income in respect of the divestment of the US anaesthetic and analgesic products to Abraxis BioScience, Inc.
**Includes $0.05 in respect of the divestment
David Brennan, Chief Executive Officer, said: The strong second quarter earnings performance reflects our continued delivery of good sales growth and margin expansion. The prospects for our current portfolio have been strengthened by the Symbicort approval in the US and the regulatory submission for Seroquel SR in the US. Progress continues in our licensing and business development initiatives, as evidenced by the completed acquisition of CAT and the recently announced collaboration with Abbott in the US cholesterol market.
Sales in the second quarter increased by 10 percent at CER, or 8 percent on an as reported basis (including a 2 percent adverse impact from currency movements). Sales outside the US were up 8 percent. Reported US sales growth was 12 percent, with underlying sales growth slightly higher.
R&D expense increased by 15 percent to $955 million, including full accrual for all remaining costs associated with Galida. Excluding this charge, underlying R&D costs grew by 10 percent, SG&A expenses increased by 5 percent to $2,290 million. Operating profit was up 30 percent in the second quarter to $2,131 million, including $109 million in other income associated with the recognition of a portion of the gain on the divestment of the US anaesthetic and analgesic products. Underlying operating profit growth (excluding the gain) was up 23 percent. Second quarter operating margin was 32.2 percent on an as reported basis, compared with 28.0 percent in the second quarter 2005. Earnings per share in the second quarter were $1.02 versus $0.75 in 2005, an increase of 41 percent.
The combined sales of five key growth products (Nexium, Seroquel, Crestor, Arimidex, and Symbicort) grew by 21 percent in the second quarter, to $3,299 million.
Nexium sales in the second quarter were $1,283 million, up 8 percent. Nexium sales outside the US were up 13 percent. Reported US sales growth was 5 percent, which was affected by changes in managed care rebate accruals (chiefly in the second quarter 2005) and some inventory movements; underlying growth was estimated to be 14 percent, a continuation of the trend of strong volume growth partially offset by lower realized prices.
Crestor sales in the second quarter were $480 million, up 51 percent. Sales in the US were up 47 percent. Crestor share of total prescriptions in the US statin market was 8.0 percent in the week ending 14 July, up 1.7 points since the beginning of the year. Crestor sales in other markets were up 58 percent. On 5 July, AstraZeneca and Abbott announced a US collaboration to co-develop and market a single pill, fixed dose combination of Crestor and Abbotts next generation TriCorR (ABT-335) as part of a comprehensive treatment regimen for mixed lipid disorders.
Symbicort sales in the second quarter were $308 million (up 25 percent) as sales continue to outpace the market growth for fixed combination treatments for asthma and COPD. On 21 July, the US FDA approved Symbicort for the maintenance treatment of asthma in patients aged 12 years and older. AstraZeneca plans to launch Symbicort in the US in mid-2007.
Arimidex sales in the second quarter were $379 million, up 31 percent on continued growth in usage for primary adjuvant treatment of early breast cancer in post-menopausal women. Recently, a new indication for Arimidex was granted in some EU markets (UK, Germany, Austria, Italy, Spain and Portugal). In these countries, Arimidex is now indicated for the adjuvant treatment of early breast cancer in hormone receptor positive post-menopausal women who have received two to three years of adjuvant tamoxifen. This new indication makes Arimidex the first and only aromatase inhibitor to be approved for both primary adjuvant use and following two to three years of tamoxifen.
Seroquel sales in the second quarter were up 28 percent, to $849 million, on good growth in the US (up 30 percent) and in other markets (up 24 percent). On 17 July, the Company announced the submission of a New Drug Application to the US FDA for a sustained release (SR) once-daily formulation of Seroquel for the treatment of patients with schizophrenia. A filing for Seroquel SR in Europe is expected towards the end of this year.First Half
For the first half, sales increased 11 percent at CER, or 8 percent on an as reported basis (including a 3 percent adverse impact from currency movements). Sales in the US were up 14 percent, with sales in other markets up 8 percent. Combined sales for five key growth products were $6,294 million (up 23 percent) in the first half, on strong performances for Nexium (up 11 percent), Seroquel (up 29 percent), Crestor (up 48 percent), Arimidex (up 34 percent), and Symbicort (up 24 percent).
Double-digit sales growth and continued cost discipline resulted in a 28 percent underlying increase in operating profit. With the divestment gain included, operating profit was up 31 percent, with a 5.4 percentage point improvement in operating margin (to 32.1 percent of sales) in the first half. Earnings per share were $1.92 compared with $1.38 last year, an increase of 41 percent.
The strong sales and earnings momentum keeps the Company firmly on track to deliver its financial targets for the full year. Also included in earnings for the year is the one-off gain on the divestment of the US anaesthetic and analgesic products and the amortization of the related deferred gain, as well as full consolidation of CAT and the amortization of its intangibles. Taking all these factors into account, the Company anticipates earnings per share in the upper half of the target range of $3.60 to $3.90.
Included in this target is around 24 cents of earnings related to Toprol-XL in the US for the remaining 5 months of the year. This assumes generic companies do not receive final regulatory approval and seek to launch at risk. This 24 cents of earnings exposure excludes any one-time asset or inventory adjustments that may be required.
Disclosure Notice: The preceding forward-looking statements relating to expectations for earnings and business prospects for AstraZeneca PLC are subject to risks and uncertainties, which may cause results to differ materially from those set forth in the forward-looking statements. These include, but are not limited to: when and if a generic competitor to Toprol-XL were introduced in the US market prior to completion of Appellate Court process, the rate of growth in sales of generic omeprazole in the US, continued growth in currently marketed products (in particular Crestor, Nexium, Seroquel, Symbicort and Arimidex), the growth in costs and expenses, interest rate movements, exchange rate fluctuations, and the tax rate. For further details on these and other risks and uncertainties, see AstraZeneca PLCs Securities and Exchange Commission filings, including the 2005 Annual Report on Form 20-F.
All narrative in this section refers to growth rates at constant exchange rates (CER) unless otherwise indicated
Reported sales increased by 8 percent and operating profit by 24 percent. At constant exchange rates, sales increased by 10 percent and operating profit by 30 percent.
Currency movements for the quarter had an adverse impact to sales of 2 percent and 6 percent to operating profit, resulting in a decrease to earnings per share of 3 cents for the quarter. Although in comparison to quarter two last year, the dollar was slightly stronger against most currencies (euro 0.2 percent, Japanese yen 6.5 percent, Swedish krona 1.7 percent and sterling 1.6 percent), the impact of currency volatility within the quarter on settlements has exaggerated the impact on operating profit. Consequently, the normal hedging effect of the cost base has not occurred, resulting in a higher impact on profit than sales.
Underlying US sales growth is slightly above reported growth of 12 percent after adjusting for managed market accruals, inventory movements and other factors. Outside the US, sales increased by 8 percent.
Reported operating margin increased by 4.2 percentage points from 28.0 percent to 32.2 percent. Currency reduced margin by 0.7 percentage points and the gain on the divestment of the US anaesthetic and analgesic products increased margin by 1.7 percentage points, resulting in an underlying margin improvement of 3.2 percentage points for the quarter.
Gross margin increased by 0.4 percentage points to 79.0 percent of sales. Currency depressed gross margin by 1.1 percentage points and payments to Merck at 4.6 percent of sales were 0.4 percentage points lower than second quarter last year, implying an underlying margin increase of 1.1 percentage points, due mostly to favourable sales mix and continuing operational efficiencies.
R&D expenditure was $955 million in the second quarter, up 15 percent over last year due to increased investment in the early portfolio and life cycle management programmes. Included in R&D is a charge of $38 million as a result of the discontinuation of the Galida development programme, which represents the estimated costs to complete all remaining clinical work. Excluding this charge, underlying R&D costs grew by approximately 10 percent. In comparison to the second quarter 2005, R&D reduced operating margin by 0.6 percentage points. SG&A increased by 5 percent to $2,290 million for the quarter due to the continued investment in key products across the business. SG&A added 1.7 percentage points to operating margin in the quarter.
Higher other income increased operating margin by 2.3 percentage points due principally to higher royalties and a gain of $109 million arising from the divestment of the US anaesthetic and analgesic products to Abraxis BioScience, Inc. in the US (see Investments below).
The fair value adjustments relating to financial instruments amounted to a $5 million benefit in the quarter; $3 million credit in cost of sales, $3 million charge in R&D and $5 million credit to interest.First Half
Reported sales increased by 8 percent and operating profit by 30 percent. At constant exchange rates, sales increased by 11 percent and operating profit by 31 percent.
Currency had an adverse impact to sales of 3 percent and 2 percent to operating profit. Cumulatively, exchange has decreased EPS by 2 cents. Assuming current exchange rates remain unchanged for the remainder of the year, we would expect currency to have a broadly neutral impact on EPS in the second half of the year.
Underlying US sales growth approximates to reported sales growth of 14 percent for the six months. Outside the US, sales increased by 8 percent.
Operating margin increased by 5.4 percentage points from 26.7 percent to 32.1 percent. Excluding the effects of currency and the divestment gain, underlying margin improved 4.0 percentage points for the half year.
Gross margin increased by 2.3 percentage points to 79.4 percent of sales. Included in the half year last year was a provision for the early termination of the Medpointe Zomig US distribution agreement. Excluding this, together with lower payments to Merck (4.6 percent of sales) and currency movements, underlying margin improved by 2.1 percentage points.
R&D expenditure was up 12 percent to $1,816 million (9 percent excluding Galida costs) primarily due to increased investment across the portfolio. Compared with the first half 2005, R&D reduced operating margin by 0.1 percentage points. SG&A increased by 7 percent to $4,405 million over last year primarily the result of increased investment in the key products. SG&A added 1.1 percentage points to operating margin in the first half.
The fair value adjustments relating to financial instruments amounted to a $4 million charge for the half year; $5 million charge in cost of sales and $1 million credit to interest.Toprol-XL
In the six months, Toprol-XL contributed sales of $732 million and EPS of 26 cents. While uncertainties exist as to whether, when and with which strengths generic companies will launch, the Company is determined to maximise the value contribution from Toprol-XL for its remaining life. Given these uncertainties and the impact various scenarios have on expected performance for 2006, 2007 and 2008, the Company believes that future performance can be best judged by excluding Toprol-XL from current performance. Consequently, if Toprol-XL were excluded from the current and prior periods, sales growth for the quarter and half year would be 9 percent and 10 percent respectively and EPS growth would be 41 percent in both periods.
Based on current forecasts, the contribution of Toprol-XL to EPS for the remaining five months of the year is estimated at 24 cents, assuming no generic launches at risk.Interest and Dividend Income
Net interest and dividend income for the first half was $146 million (2005 $64 million), with $78 million in the second quarter (2005 $31 million). The increase over 2005 is primarily attributable to higher average investment balances and yields. The reported amounts include $24 million (2005 $11 million) in the first half and $13 million (2005 $6 million) in the quarter arising from employee benefit fund assets and liabilities reported under IAS 19, "Employee Benefits".Taxation
The effective tax rate for the half year was 28.9 percent compared with 29.9 percent for the same period last year. The full year 2005 tax rate was 29.1 percent. It is anticipated that the full year tax rate for 2006 will be around 29 percent.Cash Flow
Free cash flow* for the first six months was $2,922 million compared to $2,855 million in the first half of 2005.
Shareholder returns of $3,069 million comprising share repurchases of $1,627 million and $1,442 million dividend payment and a net $213 million cash outflow primarily from the acquisition of KuDOS Pharmaceuticals Limited in the first quarter were offset by proceeds from share issues of $746 million, $157 million additional short term investments held by Cambridge Antibody Technology Group plc, and $20 million of other non-cash movements, resulting in an overall increase in net funds of $563 million. The offer by AstraZeneca UK Limited for Cambridge Antibody Technology Group plc was declared unconditional on 22 June. As of 30 June, valid acceptances in respect of more than 95 percent of the shares to which the offer relates had been acquired or received. Settlement in respect of these acceptances, totalling $858 million (£463 million) occurred in July. Compulsory acquisition of remaining shares for a total of $43 million (£23 million) is now underway.
Cash generated from operating activities in the period was $3,421 million, $267 million higher than in the first half of 2005. An increase in profit before tax of $1,018 million was offset by a $483 million increase in working capital requirements, mainly as a result of higher sales volumes and a $197 million increase in tax paid.
Net cash outflows from investing activities of $11 million for the first half contrast with inflows of $477 million for the similar period of 2005. The reduction is a result of $331 million expenditure on collaboration deals with Abraxis BioScience, Inc., Protherics PLC, Targacept, Inc. and AtheroGenics, Inc. together with outflows of $203 million in respect of the acquisition of KuDOS Pharmaceuticals Limited.
* - Cash flows before share issues and returns to shareholders; movements in short term investments, fixed deposits and short term borrowings; and acquisitions.
In January, the Company acquired KuDOS Pharmaceuticals Limited, a UK biotechnology company focused on the discovery and development of oncology therapies based on inhibition of DNA repair. The acquisition provides the Company with a widely recognised expert group and technology platform that complements the existing capabilities of the oncology franchise, one of the Companys key therapy areas. The acquisition price of $210 million, which was settled in cash, consists mainly of an intangible asset of $285 million, goodwill of $12 million and a deferred tax liability of $85 million.
In April, the Company announced an agreement with Abraxis BioScience, Inc. to co-promote for five and a half years their cancer therapy product ABRAXANE® in the US from 1 July as well as the divestment of the Companys US anaesthetic and analgesic products to Abraxis BioScience, Inc. The co-promotion of ABRAXANE® provides the Company with access to the key US chemotherapy market and at the same time complements and extends the US oncology product portfolio. For the right to co-promote ABRAXANE® the company paid Abraxis BioScience, Inc. $200 million which has been classified as an intangible asset on the balance sheet and is to be amortised over the term of the agreement which includes two years after the completion of the co-promotion (7.5 years). The divestment of the US anaesthetic and analgesic products, which was completed 28 June, resulted in a gain of $235 million, of which $109 million was recognised in quarter two with the remaining $126 million to be recognized over the five year supply contract.
The Company announced in May its intention for AstraZeneca UK Limited to acquire the remaining share capital of Cambridge Antibody Technology Group plc. On 22 June, it was announced that the offer to acquire the entire share capital of Cambridge Antibody Technology Group plc had been declared unconditional. The cost of acquisition, including all directly attributable expenses was substantially settled in July, although Cambridge Antibody Technology Group plc has been consolidated from the date of the offer being declared unconditional. Cash was used to acquire all the equity instruments of Cambridge Antibody Technology Group plc. The Company has consolidated total net assets of approximately $1,200 million, including intangible assets and goodwill of approximately $1,300 million, representing products in development, royalty income from launched products and the technologies utilized by Cambridge Antibody Technology Group plc in developing monoclonal antibodies together with the resultant libraries and a deferred tax liability of $390 million plus other net assets of $300 million.
In July, the Company announced collaboration with Abbott to co-develop and market a combination product using Crestor and Abbotts proprietary, next generation TriCor® (ABT-335).
During the second quarter, 19.5 million shares were repurchased for cancellation at a total cost of $1,063 million bringing the total repurchases for the first half of the year to 31.1 million shares at a total cost of $1,627 million. During the first six months, 18.2 million shares were issued in consideration of share option exercises for a total of $746 million.
The total number of shares in issue at 30 June 2006 was 1,568 million.
The share buy back programme is calculated to have added 3 cents to EPS for the half year after allowing for an estimate of interest income foregone.
Although it has not yet done so, the Company remains open to the possibility of using its existing authority from shareholders to give irrevocable instructions to banks, in order to continue the share repurchase programme during close periods ahead of publication of its results. Appropriate announcements about any such transactions would be made.
The R&D pipeline table was updated in conjunction with the Business Review meeting held on 8 June. A copy of this table is available on the Companys website, www.astrazeneca.com, under information for investors.
Pipeline developments that have occurred subsequent to this update include:
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Independent review report to AstraZeneca PLC
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Listing Rules of the Financial Services Authority. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Review work performed
KPMG Audit Plc
27 July 2006
Notes to the Interim Financial Statements
1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
2 NET CASH FUNDS
Non-cash movements in the period consist of fair value adjustments under IAS 39.
3 LEGAL PROCEEDINGS AND COMMITMENTS
AstraZeneca is involved in various legal proceedings considered typical to its businesses, including litigation relating to employment matters, product liability, commercial disputes, infringement of intellectual property rights, the validity of certain patents and securities law. The matters discussed below constitute the more significant developments since publication of the Companys Annual Report and Form 20-F Information 2005.
Matters previously disclosed in respect of the first quarter of 2006
Losec / Prilosec (omeprazole)
AstraZeneca has full confidence in and will continue vigorously to defend and enforce its intellectual property rights protecting Nexium.
Seroquel (quetiapine fumarate)
AstraZeneca has also been served with a putative nationwide class action complaint, which was filed in federal court in the Southern District of Illinois. It is very similar in form and content to the complaint filed in the US District Court for the Middle District of Florida in 2003 (Susan Zehel-Miller et al. v. AstraZenaca [sic], AstraZenaca Pharmaceuticals LP, [sic]) that sought certification of a nationwide class of Seroquel users and others, including individuals who were alleged to have developed diabetes as a result of using Seroquel. The federal court in Florida denied certification of the class in the Zehel-Miller case. In early 2005, after the plaintiffs efforts in that case to secure appellate relief failed, the plaintiffs agreed to a voluntary dismissal of all of their claims with prejudice.
AstraZeneca is also aware of approximately 360 other cases involving Seroquel (and in many instances, other atypical anti-psychotics) and allegations of diabetes or other allegedly related injuries that have been filed in various states, but these have not been served.
Recently, two consortia of plaintiffs lawyers filed motions with the Judicial Panel on Multidistrict Litigation seeking centralisation of all of the federal court cases alleging that Seroquel caused diabetes or other allegedly related injuries. AstraZeneca has opposed this motion. The Panels decision is not expected before the end of May 2006.
AstraZeneca intends to defend vigorously all of the pending cases relating to Seroquel.
Toprol-XL (metoprolol succinate)
Matters disclosed in respect of the second quarter of 2006
Seroquel (quetiapine fumarate)
In July 2006, the Judicial Panel on Multidistrict Litigation agreed to plaintiffs requests to consolidate the federal court cases involving Seroquel, selecting the judge recommended by AstraZeneca, Judge Anne Conway, Middle District of Florida.
Two putative class action complaints involving Seroquel and allegations of diabetes or other allegedly related injuries were recently filed against AstraZeneca Canada Inc., as well as various affiliates, in the provinces of Québec and British Columbia.
AstraZeneca intends to defend vigorously all of the pending cases relating to Seroquel.
Arrangements with Merck
The exit provisions are subject to a minimum overall net payment of $3.3 billion and will offer AstraZeneca unencumbered discretion in its operations in the US market (except in respect of Prilosec and Nexium) without the restrictions of various contractual obligations that are currently imposed as a result of Mercks interests, together with relief from contingent payment obligations. The projected value of the benefits to be obtained in 2008 depends on a number of factors including the future contributions from products that have already been launched, those that are due to be launched in the US and those that are in development, together with the further value that AstraZeneca can extract from greater freedom to operate in the US.
4 HALF YEAR TERRITORIAL SALES ANALYSIS
5 SECOND QUARTER TERRITORIAL SALES ANALYSIS
7 SECOND QUARTER PRODUCT SALES ANALYSIS
Information for US Investors
RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES
The consolidated income statement and balance sheet set out on pages 12 and 14 are prepared in accordance with IASs and IFRSs (collectively IFRS) as adopted by the European Union (EU), which differ in certain material respects from those accounting principles generally accepted in the United States (US GAAP). The differences as they apply to AstraZeneca PLC are explained in the Annual Report and Form 20-F Information 2005. The effects on income and shareholders equity of the GAAP differences are shown below.
RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED)
The record date for the first interim dividend payable on 18 September 2006 (in the UK, Sweden and the US) is 11 August 2006. Ordinary shares will trade ex-dividend on the London and Stockholm Stock Exchanges from 9 August 2006. ADRs will trade ex-dividend on the New York Stock Exchange from the same date.
Future dividends will normally be paid as follows:
The following brand names used in these interim financial statements are trademarks of the AstraZeneca Group of companies:
Accolate Arimidex Astra Tech Atacand Casodex Crestor Diprivan Faslodex Iressa Losec Merrem Nexium Nolvadex Oxis Plendil Prilosec Pulmicort Pulmicort Respules Rhinocort Rhinocort Aqua Seloken Seroquel Symbicort Tenormin Toprol-XL Zestril Zoladex Zomig
In order to utilise the safe harbour provisions of the US Private Securities Litigation Reform Act 1995, we are providing the following cautionary statement: These interim financial statements contain certain forward-looking statements about AstraZeneca. Although we believe our expectations are based on reasonable assumptions, any forward-looking statements may be influenced by factors that could cause actual outcomes and results to be materially different from those predicted. We identify the forward-looking statements by using the words anticipates, believes, expects, intends and similar expressions in such statements. These forward-looking statements are subject to numerous risks and uncertainties. Important factors that could cause actual results to differ materially from those contained in forward-looking statements, certain of which are beyond control, include, among other things: the loss or expiration of patents, marketing exclusivity or trade marks; exchange rate fluctuations; the risk that R&D will not yield new products that achieve commercial success; the impact of competition, price controls and price reductions; taxation risks; the risk of substantial product liability claims; the impact of any failure by third parties to supply materials or services; the risk of delay to new product launches; the difficulties of obtaining and maintaining governmental approvals for products; the risk of failure to observe ongoing regulatory oversight; the risk that new products do not perform as we expect; and the risk of environmental liabilities.