AstraZeneca Secures Licensing Deal for Innovative Weight-Loss Drug and Raises Financial Outlook
AstraZeneca boosts its revenue forecast amid increased demand for cancer therapies and partners with Eccogene to develop a promising new weight-loss medication.
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Highlights
- AstraZeneca inks a licensing agreement with Shanghai-based Eccogene for an experimental oral weight-loss drug.
- This strategic move positions AstraZeneca to compete with key players like Eli Lilly and Novo Nordisk in the expanding obesity treatment market.
- The company surpassed profit and sales expectations and upgraded its guidance driven by robust cancer drug sales.
AstraZeneca (AZN) announced a significant licensing agreement for a novel weight-loss pill and raised its financial guidance following strong demand for its oncology portfolio.
The agreement grants AstraZeneca exclusive global rights (excluding China) to Eccogene's ECC504, a once-daily oral medication that demonstrated encouraging results in Phase 1 trials for weight reduction. ECC504 also targets type 2 diabetes and related cardiometabolic conditions.
Under the deal, Eccogene will receive an upfront payment of $185 million, with potential additional payments up to $1.825 billion tied to clinical, regulatory, and commercial milestones, plus tiered royalties on future sales. In China, Eccogene retains rights to collaborate with AstraZeneca on local production of ECC504.
This announcement follows closely after Eli Lilly's FDA approval of Zepbound, an injectable weight-loss drug whose active ingredient, tirzepatide, is also approved for type 2 diabetes under the Mounjaro brand. The market for diabetes medications with weight management benefits, including Novo Nordisk's Ozempic and Wegovy, continues to grow rapidly.
AstraZeneca reported Q3 fiscal 2023 earnings per share of $1.73, with revenues rising 4% year-over-year to $11.49 billion, both surpassing analyst expectations. The company noted that sales were somewhat constrained by reduced demand for COVID-19 treatments.
Reflecting its strong quarterly performance, AstraZeneca raised its full-year revenue guidance to a mid-single-digit percentage increase from the prior low-to-mid-single-digit forecast. Excluding COVID-19 products, sales are now expected to grow in the low-teens percentage range, up from the previous low-double-digit outlook. Core EPS guidance was also lifted to a low-double-digit to low-teens percent increase, compared to the earlier high-single-digit to low-double-digit estimate.
Following the news, AstraZeneca American depositary receipts climbed over 2% in early trading on Thursday, although the stock remains down for the year.
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