AstraZeneca signs deal for oral weight loss drug and lifts profit outlook

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AstraZeneca is to enter the race for a weight loss pill, as it raised its profit outlook on strong demand for its cancer drugs.

The Anglo-Swedish drugmaker announced a licensing agreement for an oral medicine belonging to the same class as Novo Nordisk’s blockbuster Wegovy drug, which treats conditions including diabetes and obesity that affect more than 1bn people globally.

The company also reported a 6 per cent increase in revenues in the third quarter as demand for its oncology and rare disease drugs offset declining sales of Covid-19 vaccines.

AstraZeneca is now expecting total revenue excluding Covid drugs to increase by a low-teens percentage, up from a previously guided low double-digit rise. Core earnings per share are forecast to rise by as much as a high double-digit percentage, up from a best-case scenario of a low double-digit rise.

Shares in AstraZeneca rose 2.7 per cent on Thursday morning,

AstraZeneca’s agreement with China’s Eccogene is worth up to $2.01bn in total, with Eccogene receiving $185mn as an upfront payment to give exclusive global rights, excluding China, to the development and marketing of the drug. A further $1.83bn will be payable depending on milestones.

Demand for the injectable Wegovy has pushed up shares in Novo Nordisk by almost 50 per cent in the year to date. And competition is heating up, with regulators on both sides of the Atlantic this week approving Eli Lilly’s injectable diabetes medication for use as a weight loss treatment, making it the first direct rival to Wegovy.

AstraZeneca’s medicine would be in pill form, potentially giving the company a strong position in a booming market. The drugmaker said the molecule was in early clinical trials, but it had shown a clinical profile encouraging blood sugar and body weight reduction, as well as “desirable” safety and tolerability data.

Sharon Barr, executive vice-president for biopharmaceutical research and development at AstraZeneca, said she believed the drug “could offer alternatives to current injectable therapies”.

Excluding coronavirus products, third-quarter sales at AstraZeneca grew 13 per cent to $11.49bn, beating estimates and boosted by oncology and rare diseases, two of the company’s key areas of focus.

Pascal Soriot, chief executive, said the company “continued its strong growth trajectory” and that the decision to raise guidance was because of “the momentum in the year to date”.

In the third quarter, AstraZeneca oncology and cardiovascular drug sales grew 17 per cent and 16 per cent respectively, the company said on Thursday. But sales of its Covid vaccine and antibody treatment flatlined to zero, compared with $716mn in the same period in 2022.