Astellas Pharma’s Earnings Call: Mixed Outcomes and Strategic Shifts

Astellas Pharma ((JP:4503)) has held its Q3 earnings call. Read on for the main highlights of the call.

The latest earnings call for Astellas Pharma revealed a mixed sentiment, reflecting both achievements and challenges. While the company celebrated significant sales growth for key products like XTANDI, XOSPATA, and PADCEV, it faced hurdles with the performance of VEOZAH, resulting in operating profit declines. Despite progress in product launches and sales in key areas, the financial metrics did not fully meet expectations, indicating a need for strategic adjustments.

Strong Performance by Key Products

XTANDI and XOSPATA emerged as strong performers for Astellas Pharma, aligning with the company’s full-year forecasts. XTANDI showcased a 5% year-on-year growth, achieving JPY 560 billion in sales, marking a 9% increase. XOSPATA’s global sales also showed significant growth, reaching JPY 41.3 billion, a 14% rise from the previous year.

PADCEV Sales Surge

PADCEV demonstrated impressive sales momentum, with global sales soaring to JPY 55.6 billion, a 68% year-on-year increase. This surge was largely driven by successful market penetration in the US, prompting an upward revision of potential peak sales to between JPY 400 billion and JPY 500 billion.

IZERVAY Encouraging Launch

The launch of IZERVAY has shown promise, achieving JPY 5.3 billion in sales within four months and capturing an estimated 20% market share in the third quarter. This encouraging start highlights the product’s potential in the market.

Operating Profit Decline

Astellas Pharma reported a significant decline in operating profit, which dropped to JPY 74.1 billion, a decrease of 59.1% year-on-year. This decline was primarily attributed to the underperformance of VEOZAH and the impacts of acquisitions.

VEOZAH Sales Behind Expectations

VEOZAH’s sales fell below expectations, leading to a downward revision of its full-year forecast from $375 million to $50 million. The lower-than-expected uptake and challenges in payer coverage were significant contributing factors.

Challenges with Payer Coverage and Prescriptions

The perception of VEOZAH’s coverage among healthcare providers (HCPs) was noted to be lagging behind actual progress, affecting prescription rates. Additionally, the time required for patients to consult with HCPs was longer than anticipated, impacting sales.

Revenue and Profit Forecast Revised Downward

Astellas Pharma revised its revenue forecast downward by JPY 46 billion to JPY 1,562 billion, citing the current progress of VEOZAH and other factors. This revision reflects the company’s strategic reassessment in response to market conditions.

Significant Decrease in Core Operating Profit

The core operating profit experienced a substantial decrease, falling to JPY 149.6 billion, a 36% year-on-year drop. This decline was influenced by acquisitions and increased competition from generics.

Forward-Looking Guidance

Looking ahead, Astellas Pharma has provided guidance for Q3 FY 2023, indicating a 2.1% year-on-year revenue growth to JPY 1,189.1 billion, supported by a positive foreign exchange impact. Despite the challenges, the company remains optimistic about the growth prospects for key products like XTANDI and PADCEV. The revised potential peak sales forecast for PADCEV, driven by robust study results, signals strong growth prospects for FY 2024 and beyond.

In summary, the earnings call for Astellas Pharma painted a picture of mixed achievements and challenges. While the company celebrated strong sales growth for certain products, it faced significant hurdles with others, notably VEOZAH, which impacted overall financial performance. The forward-looking guidance reflects cautious optimism, with strategic adjustments anticipated to navigate the challenges ahead.