Shares of AZN stock popped Thursday after AstraZeneca (AZN) said it would spend up to $2.01 billion to license an experimental weight-loss drug from Eccogene.
The news comes a day after Eli Lilly (LLY) gained U.S. approval for Zepbound, a rival to Novo Nordisk‘s (NVO) Wegovy. Both drugs target a gut hormone called GLP-1 to improve feelings of satiety and markers of blood sugar, as well as how fast the stomach empties itself.
AstraZeneca has struggled with its GLP-1 efforts. Earlier this year, it scrapped two potential candidates and, although it’s still testing a weight-loss drug, that drug targets a different mechanism.
Enter Eccogene’s ECC5004. Eccogene is testing it in obesity, type 2 diabetes and other cardiometabolic conditions. AstraZeneca will pay Eccogene $185 million up front and up to $1.825 billion in future clinical, regulatory and commercial milestones to license the drug. Eccogene could also receive royalties.
AstraZeneca has the right to develop ECC5004 everywhere but China where it will share in the efforts with Eccogene.
In morning trading on today’s stock market, AZN stock jumped 2.8% near 62.60.
AZN Stock: Mixed Quarterly Report
Also Thursday, AstraZeneca reported mixed third-quarter results.
The company generated $11.49 billion in total sales. But that missed the forecast of analysts surveyed by FactSet for $11.55 billion. Still, sales climbed 4% on a strict, as-reported basis, and 5% when discounting exchange rates.
On an as-reported basis, profit tumbled 16% to 89 cents per share, but topped AZN stock analysts’ consensus estimate for 84 cents. In constant currency, earnings fell 6%. AstraZeneca also reported core earnings of $1.73 a share, up 4% on a strict reported basis and up 9% minus exchange rates.
Notably, AstraZeneca said revenue climbed 15% when excluding its Covid products.
On the back of the earnings report, AstraZeneca boosted its sales and core earnings outlook. The firm now expects revenue to climb by a mid-single-digit percentage vs. previous calls for a low-to-mid-single digit increase. Core earnings are also expected to rise by a low double-digit and low-teens percentage.
Excluding Covid medicines, total revenue is projected to climb by a low-teens percentage.
AZN stock analysts forecast earnings of $3.66 a share and $45.77 billion in sales.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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