GlaxoSmithKline reported a 32% rise in revenue in Q1 and noted higher quarterly profit as it announced it is on track to demerge and list its consumer healthcare arm Haleon on Wednesday.

In the first quarter of 2022, GlaxoSmithKline recorded a 32% increase in revenue to £9.7bn with Commercial Operations contributing £7.1bn.

Specialty Medicines recorded £3.1bn which made up almost half of the Commercial Operations £7bn contribution. The segment saw a 98% rise which was driven by consistent growth in all therapy areas including sales of Xevudy. The sale of Xevudy amounted to £1.3bn for GlaxoSmithKline.

Vaccine turnover increased by 36% to £1.66bn, led by Shingrix which is a shingles vaccine for adults aged 50 and over, in the US and Europe, reflecting robust performance and the advantage of a favourable comparative in Q1 2021, when sales were hit by COVID-19-related disruptions in numerous markets and decreased Centers for Disease Control purchases.

GlaxoSmithKline’s General Medicines generated £2.34bn, up 2%, thanks to Trelegy’s growth in all regions, the antibiotics market’s recovery, and the benefit of a favourable prior period returns and rebates adjustment, which helped to offset the impact of generic competition in the US, Europe, and Japan.

The remaining £2.6bn of the group’s revenue came from Consumer Healthcare which rose 14%.

GSK consumer healthcare will become Haleon in July, leaving a biopharma-focused ‘New GSK,’ according to the company’s demerging plans. Since early 2020, the separation has been in the works.

Sensodyne toothpaste, Panadol & Advil pain relievers, and Centrum vitamins will all be available at Haleon.

GlaxoSmithKline’s total operating profit rose 65% to £2.8bn compared to £1.69bn in Q1 2021 which included an upfront settlement from Gilead of £924m.

GlaxoSmithKline’s total EPS increase 67% to 35.9p compared to 21.5p in Q1 2021 due to leverage from significant sales growth during the quarter such as Gilead.

GlaxoSmithKline will propose a 14p quarterly dividend, down from 19p in the first quarter of 2021.

GSK aims to announce a 27p dividend for the first half-year under its new dividend policy, with 22p going to the new GSK and 5p going to consumer healthcare, soon to be Haleon.

GlaxoSmithKline 2022 Outlook

In 2022, GlaxoSmithKline estimates adjusted operating profit growth of 12% to 14%, excluding any contribution from Covid-19 solutions. GSK stated that the company intends to continue delivering on its strategic priorities.

Covid-19 solutions will generate similar sales in 2021, “but at a substantially reduced profit contribution due to the increased proportion of lower margin Xevudy sales,” according to the pharmaceutical company.

Xevudy is a Covid-19 antibody medication developed by GSK in collaboration with Vir Biotechnology, a San Francisco-based immunology business, however, it is no longer allowed for Covid-treatment in any US region due to the surge of the Omicron BA.2 sub-variant.

Emma Walmsley, Chief Executive Officer, GSK said, “We have delivered strong first quarter results in this landmark year for GSK, as we separate Consumer Healthcare and start a new period of sustained growth.”

“Our results reflect further good momentum across specialty medicines and vaccines, including the return to strong sales growth for Shingrix and continuing pipeline progress. We also continue to see very good momentum in Consumer Healthcare, demonstrating strong potential of this business ahead of its proposed demerger in July, to become Haleon.”

GlaxoSmithKline shares gained 1.15% to 1,774 after the company reported strong financials in its Q1 results.

Sebastian Skeet, Senior Analyst for healthcare sector companies at Third Bridge said, “With a consumer division split off set for July, GSK’s biggest task is to restore investor confidence in their pipeline.”

“All eyes will be on the guidance GSK will issue alongside Q2 results, and how the post-Hal Barron pipeline will tackle the patent cliff edges set for 2028.”

“Key revenue driver Shingrix’s performance was encouraging, with management seemingly upbeat on its prospects, although recent data points to prescription levels still significantly below pre-pandemic volumes. Longer term, mRNA vaccines pose a threat following Pfizer and BioNtech announcing a shingles collaboration earlier in the year.”

WPP reported revenue less pass-through costs increased 9.5% to £2.57bn on a like to like basis in Q1 2022, leading the company to increase its expectation of full-year growth from “around 5%” to 5.5%-6.5%.

The advertising and marketing firm reported a rise in revenue of 8.1% on an LFL basis to £3.09bn.

WPP Top 5 Markets

The company’s top five markets in Q1 in terms of the LFL revenue less pass-through costs growth were the USA, UK, Germany, China, and India.

Like-for-like revenue, excluding pass-through costs, increased by 8.7% in North America. GroupM, Hogarth, and Brand Consulting drove +8.9% growth in the United States.

Landor & Fitch, H+K, AKQA Group, and Hogarth were the best performers in the UK, with like-for-like revenue less pass-through costs up 8.1%.

Like-for-like revenue in Western Continental Europe increased by 8.9% excluding pass-through charges. Germany, Denmark, and Spain all did well, although France, Italy, and the Netherlands took longer to recover.

Like-for-like revenue less pass-through costs increased 11.9% in Asia Pacific, Latin America, Africa & the Middle East, and Central & Eastern Europe.

Latin America, led by Brazil, experienced the most rapid increase. The Asia Pacific region expanded by double digits as well, thanks to strong performances in China and India.

WPP Top Business Sectors

WPP’s top business sectors in Q1 in terms of the LFL revenue less pass-through costs growth were Global Integrated Agencies, Public Relations and Specialist Agencies.

Global Integrated Agencies’ like-for-like revenue less pass-through expenses increased by 8.6%, with GroupM accounting for about 36% of WPP revenue less pass-through costs, which increased by 12.8% in the first quarter.

Global Integrated Agencies was up 5.6% excluding GroupM, with Hogarth being the best performer.

Despite a solid prior period, AKQA Group, Ogilvy, and Wunderman Thompson all saw significant growth, and VMLY&R did as well.

Like-for-like revenue less pass-through costs increased 14.1%, continuing the robust trend of the previous 18 months.

H+K, BCW, and Finsbury Glover Hering, which has now merged with SVC, all grew by double digits on a like-for-like basis.

Specialist Agencies’ revenue increased by 13.0%, continuing a trend that began in 2021 and despite a very strong preceding period. The majority of the larger agencies grew by double digits on a like-for-like basis.

Contracts

WPP experienced great growth across all business sectors and geographies, with strong client demand for its integrated offering which amounted to £1.8bn in new contracts.

WPP has extended its relationship with Mars as their global media partner, added digital to our Sky media remit, won the global creative account for JDE Peet’s, and been named strategic communications partner by Migros, with a focus on commerce strategy, data, and content, in new business reviews so far this year.

It also landed new contracts with Samsung and Square.

WPP Developments

WPP led the holding company rankings for media and effectiveness in 2022, while MediaCom, Mindshare, and Ogilvy were all ranked first in their respective areas.

WPP launched Everymile, a new digital commerce managed service that will provide brands with a fully outsourced direct-to-consumer (DTC) e-commerce solution, this week.

The Metaverse Foundry, a global workforce of over 700 individuals devoted to providing brand experiences for clients in the metaverse from concept to execution, was unveiled by Hogarth, WPP’s speciality global creative content production company, in February.

WPP proceeded to revamp GroupM, its media investment company, to improve client innovation and streamline processes.

Essence and MediaCom will unite to become EssenceMediacom, a new agency offering that combines Essence’s digital and data-driven methodology with MediaCom’s scalable multichannel audience planning and strategic media capabilities, the company announced yesterday.

WPP is also forming GroupM Nexus, the world’s top media performance organisation, by combining Finecast, Xaxis, and GroupM Services, GroupM’s global community of activation professionals.

Mindshare will also finalise its merger with Neo, a worldwide performance agency.

Mark Read, Chief Executive Officer, WPP, said, “The year has started very well with continued momentum from 2021 resulting in strong growth across all businesses and regions.  Demand is strong for our services, particularly in digital media, ecommerce, data and marketing technology.

“We continue to see strong demand for our services from our clients and to invest in the many opportunities for growth driven by the digital transition, including Choreograph and the recent launch of Everymile.” 

“As a result of a strong first quarter, we now expect our growth to be in the range of 5.5% to 6.5%, up from around 5% at the start of the year. We remain very mindful of the impact of the broader macroeconomic environment on our business and  will respond quickly to any changes as the year progresses.”

WPP shares gained 0.2% to 992p on Wednesday after the company raised expectations for 2022 final results.

AstraZeneca announced on Wednesday that Enhertu was granted Breakthrough Therapy Designation in the US for patients with HER2-low metastatic breast cancer.

AstraZeneca and Daiichi Sankyo collaborated to create Enhertu, which has received Breakthrough Therapy Designation in the United States for the treatment of adult patients with unresectable or metastatic HER2-low breast cancer who have received prior systemic therapy in the metastatic setting or who have developed disease recurrence during or within six months of completing adjuvant chemotherapy.

Patients with hormone receptor-positive breast cancer should have received endocrine therapy or be ineligible for it.

AstraZeneca and Daiichi Sankyo are working together to develop and commercialise Enhertu, a precisely tailored HER2-directed antibody-drug conjugate.

The FDA Breakthrough Therapy Designation expedites the development and regulatory review of possible new medications that are intended to treat a serious ailment and fill a major unmet medical need.

The new treatment, Enhertu must have shown promising preliminary clinical outcomes that show a significant improvement over existing medicines on a clinically important endpoint.

Up to half of all breast cancer patients have tumours with a HER2 immunohistochemistry score of 1+ or 2+ in combination with a negative in-situ hybridisation test, a level of HER2 expression that makes them ineligible for HER2-targeted therapy at this time. For individuals with metastatic breast cancer, HER2 testing is commonly used to determine the best treatment options.

Targeting the lower end of the HER2 expression spectrum could be another way to slow disease progression and extend survival in metastatic breast cancer patients. Chemotherapy is now the only treatment option for HR-positive tumours that have progressed on endocrine (hormone) therapy. Those who are HR-negative have a limited number of possibilities.

Susan Galbraith, Executive Vice President, Oncology R&D, AstraZeneca said, “Today’s news is a significant validation of the potential we see for the historic DESTINY-Breast04 trial to enable a paradigm shift in how breast cancer is classified by targeting the full spectrum of HER2 expression.” 

“Enhertu continues to show transformative potential, and this milestone represents an important advance for patients with HER2-low metastatic breast cancer who are in urgent need of new treatment options and better outcomes.”

Based on findings from the key DESTINY-Breast04 Phase III study, which showed good high-level results in February 2022, the FDA awarded the Breakthrough Therapy Designation.

Enhertu showed a statistically significant and clinically meaningful improvement in progression-free survival and overall survival in patients with HER2-low unresectable and/or metastatic breast cancer in all randomly selected patients with HR-positive and HR-negative disease compared to the physician’s choice of chemotherapy, which is the current standard of care, in the trial.

Enhertu’s safety profile was similar to that of prior clinical trials, with no new safety issues discovered. The findings will be presented at a medical conference in the near future.

Enhertu has now been designated as a Breakthrough Therapy in breast cancer for the third time.

Enhertu previously obtained Breakthrough Therapy Designations in 2021 and 2017 for the treatment of second-line HER2-positive metastatic breast cancer and later-line HER2-positive metastatic breast cancer, respectively.

In 2020, Enhertu received two more Breakthrough Therapy Designations for HER2-mutant metastatic non-small cell lung cancer and HER2-positive metastatic gastric cancer.

“Historically, only patients with HER2-positive metastatic breast cancer were shown to benefit from HER2-directed therapy,” added Ken Takeshita, Global Head, R&D, Daiichi Sankyo.

“DESTINY-Breast04, in which Enhertu showed a clinically meaningful survival benefit in patients with HER2-low metastatic breast cancer, is the first trial to demonstrate that selecting patients for treatment based on low expression of HER2 has the potential to change the diagnostic and treatment paradigms for these patients.” 

“This Breakthrough Therapy Designation acknowledges the potential of Enhertu to fulfil an unmet medical need and we look forward to working closely with the FDA to bring the first HER2-directed therapy to patients with metastatic breast cancer whose tumours have lower levels of HER2 expression.”

AstraZeneca shares have dropped 0.25% to 18.8p despite Enhertu receiving another Breakthrough Therapy Designation.

AstraZeneca shares

AstraZeneca shares have been in an uptrend since March 2021, with the pharmaceutical company constantly performing and innovating to meet market needs with Covid vaccines along with an array of medicinal treatments for rare diseases, cancer and respiratory problems.

The question is, after such a strong rise in the AstraZeneca share price, is it possible for Astra shares to break to all-time highs once more?

AstraZeneca and its Results

In February 2022, AstraZeneca reported its Q4 and full-year results for 2021 where the company addressed the hike in sales as a result of the covid vaccine dole out, which was met with a positive market reaction.

AstraZeneca’s revenue climbed 41% to $37.4bn from $26.6bn in 2020 as the 41% increase in product sales to $36.5bn aided revenue growth.

The company swung to a pretax loss of $265m from a profit of $3.92bn year-on-year in 2021 as R&D costs jumped 63% to $9.74bn and SG&A expenses rose 35% to $15.2bn.

AstraZeneca said selling its vaccine at cost during the pandemic was not helping its profits.

The company’s earnings per share fell 97% to $0.08. However, core EPS climbed to $5.29, up 32% at reported rates and 37% at constant currencies. According to AstraZeneca, the discrepancy is related to the acquisition of Alexion Pharmaceuticals, as well as impairments and restructuring charges.

In July, the company purchased Alexion, a biotech company based in Boston, Massachusetts, for USD13.3 billion in cash and 236.3 million new AstraZeneca shares. Alexion is included in Astra’s results from July 21 of last year onward.

“Growth was well balanced across our strategic areas of focus, and we saw double-digit growth in all major regions, including Emerging Markets despite some headwinds in China,” said Chief Executive Pascal Soriot.

AstraZeneca and its Outlook

At constant currencies, core EPS is predicted to expand by a mid-to-high twenties percentage in 2022, while sales are expected to grow by a high teens percentage.

The revenue from Covid-19 medicines is likely to drop by a low-to-mid 20%, with a drop in vaccine Vaxzevria sales being somewhat offset by rising Evusheld sales, a Covid antibody treatment.

AstraZeneca wants to boost the annualised dividend by $0.10 to $2.90, showing its confidence. It will pay a total dividend of $2.87 for the year after granting a second interim dividend of $1.97 for 2021.

“The positive news from our pipeline, including approvals for Evusheld and Tezspire, supports the outlook for 2022. This, along with the transformative acquisition of Alexion, means that we are confident in our long term growth and profitability. After a landmark year in 2021, we are increasing the dividend for our shareholders,” Added CEO Soriot.

AstraZeneca in Latest News

Due to China’s current economic situation, AstraZeneca predicts a decline in sales.

The group has been considered a significant growth market in China, making it more vulnerable to a revenue slowdown than other ‘big pharma’ companies.

As a result of the outbreak, AstraZeneca’s growth will be hampered, especially as it begins to affect economies in other parts of the world, such as Europe and the United States, where it generates a significant portion of its total revenue.

In the face of this potential setback, AstraZeneca has pledged to donate 9m face masks to countries grappling with the illness, as well as expand diagnostic testing efforts.

Some analysts have suggested AstraZeneca may be able to offset this income loss by developing a successful pharmacological agent against Covid-19, such as their cancer medication Calquence (acalabrutinib).

A clinical trial of the medicine in Covid-19 patients is being developed quickly by the business. AstraZeneca has also teamed up with Sanofi in the hopes of producing a vaccine, which would help the company recoup lost revenue.

Earlier in April, the group’s lung cancer antibody-drug conjugate Enhertu also received a priority review from the FDA.

AstraZeneca also announced that its candidate for unresectable liver cancer Tremelimumab has been accepted under priority review by the US FDA in late April.

Apart from the positive news for Enhertu and liver cancer candidate, AstraZeneca’s Ultomiris and its investigational antisense oligonucleotide, AZD8233, presented optimistic results.

AstraZeneca Pipeline

Currently, AstraZeneca has 2 vaccines in Phase III trial under the “Other” category which are aimed to battle Covid-19.

Vaxzevria is to be used as a Covid-19 vaccine whereas, Evusheld is used for the prevention and treatment of Covid-19, both of which are in Phase III trials.

As of last quarter, AZD2816 which is used to prevent Covid-19 has been discontinued from AstraZeneca’s pursuit of fighting Covid-19.

AstraZeneca’s vaccine was the main jab used by the UK government to combat the pandemic once the vaccine was readily available.

Apart from Covid treatments under respitaroy studies, AstraZeneca has many drugs underway for oncology, cardivasular, renal & metabolism, and rare diseases. As mentioned above, the company has been enroute to approvals and optimistic results with various drugs, meaning a positive outlook for AstraZeneca in 2022.

Astra share price

The pandemic began in March 2020 and AstraZeneca shares took a sharp slump in line with a broad market sell off.

However, the group’s shares have since rallied from lows of 6,100p to trade above 10,000p at the time of writing.

Along with a general melt up in markets, Astra received investor interest after Astra joined the fight against COVID with their vaccine.

Since January 2022, AstraZeneca’s shares rose 19.8% and is one of the best performers year-to-date.

AstraZeneca Share Valuation

AstraZeneca has a current P/E of 25.8x and forward P/E of 20.3x which means analysts see higher earnings in the future.

The company has a market cap of £162bn and a ROCE of -0.3x due to the pretax loss it made in its recent results.

AstraZeneca shares have a dividend yield of 2.2% and a cover of 1.9x which may mean higher dividend payouts in the future, or deeper investments in the company which may result in higher attributable profits to shareholders.

Given the company has numerous drugs in the pipeline to hedge any risks associated with the failure of one project, not to mention the array of medicine that Astra already has in the market, the dividend seems secure and could well grow.

In terms of AstraZeneca’s broker ratings, Jefferies raised AstraZeneca shares to a ‘hold’, Barclays raised their price target 12,000p and Berenberg upgraded also AstraZeneca’s target to 12,000p with a ‘buy’ rating.

These are fairly encouraging ratings for the AstraZeneca share price and suggest we could well see record all-time highs in the near future.