AstraZeneca - LHVZD0947 K+ channel opener II Overactive bladder 300m-1,000m AZD8129 5HT(1beta)...

Please see disclosures at the back of this report

Carnegie Securities Research

Sweden

Health care c

AZN.ST 27 September 2004

Company Report

AstraZeneca

Research revitalises pipeline

NEUTRAL

MEDIUM RISK

SEK313High/Low (12M)

SEK379/310

Sector view: Neutral At the capital markets day on 6 October, we expect an update on the

research pipeline and presentation of solid clinical data underpinning current growth products (Crestor, Seroquel, Symbicort, Iressa, Nexium).

After the surprisingly negative verdict of the FDA’s advisory committee on blood-thinner Exanta, confidence in the research pipeline needs to be restored. Galida (Type II diabetes), Cerovive (stroke), and the oncology portfolio are novel developments with exciting commercial potential.

AstraZeneca will still outperform the sector on average EPS growth in the years ahead. However, we believe it will take time for the stock to recover after the blow to Exanta, thus we rate the shares NEUTRAL.

Research Angelica Fatouros +46 8 676 86 72 [email protected] Andrea Croner +46 8 676 88 73 [email protected] Erik Hultgård +46 676 86 79 [email protected]

Other key figures

No. shares (m) 1,709.0Market cap. (SEKm) 534,063EV (2004e) 67,811Avg. daily vol. ('000) 1673Free float 95.0%ROE adj. (2004e) 28.5%NIBD / Equity (2004e) -35.6%

Key figures (USD) 2003 2004e 2005e 2006e

Sales (m) 18,849 21,381 22,798 24,989EBITA (m) 4,415 4,986 5,585 6,462Pre-tax profit (m) 4,202 4,767 5,376 6,291

EPS 1.78 2.09 2.42 2.84EPS adj. 1.95 2.28 2.61 3.03

Sales growth Y/Y 6% 13% 7% 10%EPS adj. growth Y/Y -2% 17% 15% 16%EBITA margin 23.4% 23.3% 24.5% 25.9%

P/E 23.9 20.2 17.5 15.0P/E adj. 21.7 18.6 16.2 14.0EV/EBITA 15.6 13.6 12.1 10.0P/BV 5.50 5.27 5.00 4.13Dividend yield 1.9% 2.2% 2.5% 2.9%FCF yield 3.5% 5.4% 4.8% 5.4%

Source : Carnegie Research

Share price

310

320

330

340

350

360

370

380

M A M J J A S

AstraZenecaStockholm All Share (Se)

Source : JCF

Company Report AstraZeneca

27 September 2004

2


Price relative to market – 1Y Price relative to sector – 1Y Performance & valuation

Exanta’s failure has hurt the share price performance recently

300

320

340

360

380

400

420

440

S O N D J F M A M J J A S

AstraZeneca Stockholm All Share (Se)

310

320

330

340

350

360

370

380

390

400


AstraZeneca Health Care

Source: JCF Source: JCF

adj. EPS expectations - 2004e adj. EPS expectations - 2005e

We have lowered our EPS estimatesafter the Exanta disappointment

1.95

2.00

2.05

2.10

2.15

2.20

2.25

2.30


Carnegie Consensus

2.3

2.4

2.5

2.6

2.7

2.8

2.9


Carnegie Consensus

Source: Carnegie Research - JCF Source: Carnegie Research – JCF

Small premium to peers on P/E(05e)

Performance

snapshot 1M 3M 12M YTD

AstraZeneca % -7.4 -9.6 -1.8 -12.4

Peer group % 0.7 -4.6 3.3 -6.3

Carnegie Health Care % -4.3 -6.5 9.8 -1.3

Stockholm All Share (Se) % 4.1 1.7 27.0 6.5

MSCI Nordic % 7.6 5.9 31.9 3.4

MSCI Europe % 4.5 2.4 27.5 -1.2

S&P 500 % 1.3 -2.7 10.0 -0.2

MSCI World % 1.9 -1.6 11.4 0.6

Valuation

snapshot 2003 2004e 2005e 2006e

P/E 23.9 20.2 17.5 15.0

P/E adj. 21.7 18.6 16.2 14.0

EV/EBITDA 12.7 11.2 9.9 8.4

EV/EBITA 15.6 13.6 12.1 10.0

P/BV 5.50 5.27 5.00 4.13

P/BV ex. GW 7.04 6.52 5.95 4.64

Dividend yield 1.9% 2.2% 2.5% 2.9%

FCF yield 3.5% 5.4% 4.8% 5.4%

Source: JCF Source: Carnegie Research


27 September 2004

Carnegie Securities Research 3

Contents

Confidence needs to be restored 4 Sector outlook and valuation 6 Delay for blood-thinner Exanta 7 The stars to aid Crestor (i.e. the Galaxy programme) 10 Seroquel – important new indication for first in class drug 15 Symbicort – US filing expected in 2005 19 Nexium – line extensions to be completed soon 20 Iressa – exciting prospects 22 Arimidex – expanded use in early breast cancer 26 Atacand – clinical data more than charming 27

Research pipeline 28 Galida – high potential in diabetes 28 Cerovive – a tantalising opportunity for stroke treatment 30 Exciting research portfolio 33 Strong oncology pipeline 33 Promising Phase II projects 34

Disclosures and disclaimers 40


27 September 2004

4


Confidence needs to be restored After the surprisingly negative verdict of the FDA’s advisory committee on blood-thinner Exanta, confidence in the research pipeline needs to be restored. At the capital markets day on 6 October, we expect an update on AstraZeneca’s research pipeline and presentation of solid clinical data underpinning the current growth products – Crestor (cholesterol treatment), Seroquel (schizophrenia, bipolar disorder), Symbicort (asthma), Iressa (lung cancer) and Nexium (ulcers). Galida (Type II diabetes) and Cerovive (stroke) - both currently in Phase III clinical trials - and the oncology portfolio are novel developments with exciting commercial potential. We expect one or two pipeline projects to be selected for Phase III clinical trials – among these could be ZD6474 (oncology), AZD0865 (ulcers), AZD9056 (rheumatoid arthritis) and cardiovascular drugs AZD7009 and AZD6140. We also believe the capital markets day will highlight AstraZeneca’s prospects for top-tier earnings growth in the years ahead. Furthermore, we would welcome any guidance for 2005 considering the new accounting rules (the current EPS consensus includes estimates both with and without goodwill), but management usually waits with its guidance until the Q4 report. We think AstraZeneca has a solid R&D pipeline with several high-potential projects in both Phase II and Phase III trials. However, we believe it will take some time for the shares to recover after the negative outcome for Exanta, thus we rate the stock NEUTRAL.

As a result of the low number of patent expiries and a fresh portfolio of growth products, we believe that AstraZeneca is well positioned for top-tier earnings growth for several years to come. We believe that a premium of 15–25% to its peers on P/E(04e–05e) is well deserved since its EPS growth is 40% higher than that of the peer group. Based on our forecasts, the AstraZeneca shares are currently trading at a premium of 7% on earnings estimates for 2004 and 2% on earnings for 2005. The shares have been under pressure over the past couple of months, due to negative publicity from the Public Citizen consumer group regarding the safety of cholesterol treatment Crestor. We also believe it will take some time for the shares to recover from Exanta’s failure, since management’s credibility has been dented. An uptick in cholesterol treatment Crestor’s launch performance should restore confidence in the stock. Prescription data from the week ending September 17 showed that Crestor's market share of new prescriptions gained 0.3% to 7.7% and gained 0.3% to 6.4% of total prescriptions, which looks very promising after the recent flat performance.

In the past three years, AstraZeneca has managed to increase candidate drug (CD) delivery by 20% – one candidate drug is now entering pre-clinical development each month. There are also many interesting developments in AstraZeneca’s research portfolio, although these are in an early stage (none expected to be filed before 2006). Some of these could be highlighted at AstraZeneca’s capital markets day on 6 October. We also expect one or two pipeline projects to be selected for Phase III clinical trials. These could include ZD6474 (oncology), AZD0865 (ulcers), AZD9056 (rheumatoid arthritis) and cardiovascular drugs AZD7009 and AZD6140. Although we regard both Galida (Type II diabetes) and Cerovive (stroke) as exciting developments, we acknowledge that they carry high risks and have therefore included very limited sales in our forecasts.

We believe it will take some time for the shares to recover after the Exanta

disappointment

Confidence in the research pipeline needs to be restored

Galida (type II diabetes) and Cerovive (stroke), both potential blockbusters, to be

filed in 2006

ZD6474 (oncology), AZD0865 (ulcers), AZD9056 (rheumatoid arthritis) and cardiovascular drugs AZD7009 and

AZD6140 are all high potential projects


27 September 2004


Mid-term research pipeline Compound Mechanism Phase Rationale Market potential* (USD)

Cardiovascular Galida PPAR agonist III Diabetes/metabolic syndrome 1bn-3bn

AZD6140 ADP receptor antagonist II Arterial thrombosis 1bn-3bn

AZD7009 Antiarrhythmic IV, antiarrhythmic oral II Atrial fibrillation - conversion, atrial fibrillation - maintenance 1bn-2bn

AZD0837 Thrombin inhibitor I Thrombosis

AZD7806 IBAT inhibitor I Dyslipidaemia

AZD9684 CPU inhibitor I Thrombosis 1bn-2bn

AZD4619 Not disclosed I Dyslipidaemia

Neuroscience Cerovive Free radical trapping agent III Stroke 1bn-3bn

ZD0947 K+ channel opener II Overactive bladder 300m-1,000m

AZD8129 5HT(1beta) antagonist II Anxiety/depression 1bn-2bn

AZD4282 NMDA antagonist I Neuropathic pain

Oncology ZD6474 Angiogenesis inhibitor (VEGFR-TKI) II Solid tumors 300m-500m

ZD4054 Endothelin A receptor antagonist II Solid tumors 300m-500m

AZD2171 Angiogenesis inhibitor (VEGFR-TKI) I Solid tumors and haematological malignancies 300m-500m

AZD0530 SRC kinase inhibitor I Solid tumors

AZD3409 Farnesyl-transferase inhibitor (FAR) I Solid tumors

AZD5438 Selective cyclin dependent kinase inhibitor I Solid tumors

AZD6244 MEK inhibitor I Solid tumors

Gastrointestinal AZD0865 Potassium-competitive acid blocker II Acid related GI disease 1bn-3bn

AZD7371 Not disclosed II Functional GI disorders 300m-500m

AZD3355 Inhibitor of transient lower oesophageal I Gastroesophageal reflux disease (GERD)

sphincter relaxations (TLESR)

AZD9343 Inhibitor of transient lower oesophageal I GERD


Respiratory/ AZD9056 Ion channel blocker II Rheumatoid arthritis 500m-1500m

Inflammation AZD9056 Ion channel blocker II Osteoarthritis 1bn-2bn

AZD8309 Chemokine receptor antagonist I Rheumatoid arthritis

AZD8955 Collagenase inhibitor I Osteoarthritis

AZD8309 Chemokine receptor antagonist I COPD

AZD9056 Ion channel blocker I COPD

Source: AstraZeneca, Carnegie Research*

Events and impact on share price (magnitude indicated by no. of *)

2004

* 12-Jan Seroquel mania indication approved in the US

*** Q4 report 29 Jan Guidance for 2004 and an update on Crestor's launch (growing safety data base)

** 4-9 March US lobbying group Public Citizen demands Crestor's withdrawal, Bristol-Myers Squibb PROVE-IT study revealed

* 07-Apr Atacand chronic heart failure outcomes study (CHARM), file for this indication

** 26-Apr Future Iressa competitor Tarceva (launch est Q1(05)) reported survival data in monotherapy in late stage NSCLC

** Q1 report 29 April Update on launches (Crestor, Iressa, Exanta)

*** Q2 report 22 July Impact of DTC campaign of Crestor sales, update on launches (Crestor, Iressa, Exanta), revisit FY guidance

*** 10-Sep Exanta FDA Advisory committee meeting

** 06-Oct Annual Business Review, London, R&D pipeline highlighted

* H2 Iressa European approval

** Q3 report 21 Oct Exanta European launch progress, possible news on its US approval

* Q4 Arimidex (breast cancer) 5 year clinical data from the ATAC study

* Q4 Possible launch of Crestor in Japan

* 2005 Symbicort (asthma) file in the US

Source Carnegie Research


27 September 2004

6


Sector outlook and valuation The global pharmaceutical sector is now trading at a P/E(04e) of 17.4 and P/E(05e) of 15.8 – almost in line with the broader market, which is at a historically low level. The sector usually carries a premium of 10–30%, due to its stable fundamentals and cash flow-generating characteristics. We believe some reasons for the weak performance are: 1) EPS growth below the sector’s historical average of 15%; 2) increased generic competition and fears about price pressure; and 3) the forthcoming US presidential election. On balance, though, the fundamentals of the Health Care sector are strong, driven by demographics and lifestyle changes, providing long-term investors with the opportunity to pick up value companies at attractive levels.

Forward P/E and EPS Gr for AstraZeneca (GB) as of 23/09/04

-10

-5

0

5

10

15

20

25

30

35

92 93 94 95 96 97 98 99 00 01 02 03 04

P/E EPS Growth At end

Source JCFQuant

As for sector growth, IMS Health is forecasting that global pharmaceutical sales will grow by a solid 8–9% from 2004. We expect earnings growth to exceed this slightly, reaching 11–13%, i.e. not far off the historical EPS growth rate of 15%. Prescription drug sales in the US rose by 11% to USD216bn in 2003, with strong growth in the metabolic area, oncology, cardiology and CNS, benefiting Nordic companies AstraZeneca, Novo Nordisk, Lundbeck and Orion.

The debate surrounding implementation of the US Medicare bill and the US election has continued to affect the sector performance. All large pharmaceutical companies have exposure to the important US market: it accounts for around half of the global USD500bn drug market and an even greater proportion of profits. There are concerns that the costs of Medicare will escalate beyond the allocated USD400bn and that price controls on drugs will therefore have to be implemented. We believe that this is partly rhetoric that will disappear after the presidential election later this year. Health care is a major item in the Kerry campaign and a Democrat president in the US could be viewed as a negative for the industry. However, it is likely that the Republicans will maintain their majority in Congress, which means that even if Kerry wins, health care reforms will be difficult to implement. Global sector valuations are at historically low levels and the sector normally outperforms following the first US rate hike and peak in leading economic indicators. However, following the failure of Exanta, there are few near-term triggers for the AstraZeneca shares, which account for 65% of the sector’s market cap. Furthermore, Novo Nordisk (16% of the sector's market cap) is trading close to our fair value, while Lundbeck (the third largest stock in the Nordic sector) is trading above our fair value. Thus, company-specific reasons are behind our downgrade of the sector.

Sector performance the main sentiment risk

All large pharmaceutical companies have exposure to the important US market


27 September 2004


Consensus forecasts Pharma majors Market cap P/E 2004e 2005e 2006e

EPS CAGR 04-06 PEG 2004

P/E 05 vs average

EV/Sales 2004e

EV/Sales 2005e

EV/EBITDA 2004e

EV/EBITDA 2005e 1M abs perf.

Abbott Laboratories 66,099 18.6 16.8 15.7 9% 2.2 106 3.6 3.3 12 12 3.3

Altana AG 8,134 17.4 16.0 14.3 10% 1.7 101 2.1 1.9 8 8 7.3

AstraZeneca 72,742 20.1 17.2 14.7 17% 1.2 109 3.2 2.9 11 10 -5.1

Aventis 65,496 16.7 15.4 14.6 7% 2.5 97 3.2 3.0 10 9 -1.1

Bristol-Myers Squibb 47,054 15.1 17.3 17.9 n.a. n.a 109 2.3 2.3 9 10 4.0

Lilly (Eli) 71,972 22.6 19.5 16.9 16% 1.4 123 5.3 4.7 17 15 -1.6

GlaxoSmithKline Plc 128,905 15.2 14.3 13.4 7% 2.3 90 3.5 3.3 10 10 8.5

Johnson & Johnson 167,846 18.7 17.1 15.6 9% 2.0 108 3.8 3.7 12 11 -1.1

Lundbeck 4,165 14.3 15.5 13.0 5% 2.8 98 2.4 2.3 7 8 -1.4

Merck & Co 97,845 14.0 13.2 13.8 1% 14.8 83 4.3 4.0 10 9 -4.9

Novartis 126,165 19.9 17.7 15.8 12% 1.6 112 4.2 3.8 15 13 2.7

Novo Nordisk 18,962 23.4 21.4 18.8 12% 2.0 135 3.9 3.5 13 12 1.9

Pfizer 223,956 13.9 12.6 12.2 7% 2.1 80 4.3 4.0 11 10 -5.9

Roche 91,607 23.0 20.5 18.1 13% 1.8 130 3.5 3.2 11 10 8.1

Sanofi-Aventis 96,286 16.6 14.3 12.2 17% 1.0 90 5.1 2.8 16 11 -0.3

Orion Group 1,959 17.9 16.1 13.3 16% 1.1 101 0.8 0.8 9 8 2.0

Wyeth 50,351 14.2 13.2 12.1 9% 1.7 83 3.1 2.8 11 9 3.9

Weighted average 17.4 15.8 14.6 0.1

Average 17.7 16.4 14.9 10% 2.6 3.5 3.1 11.4 10.3 0.8

EU weighted average 18.6 16.6 14.9 2.9

US weighted average 16.4 15.2 14.4 -2.3

Source: JCF Quant

Carnegie forecasts P/E 2004e 2005e 2006eEPS CAGR

04-06 PEG 2004 Price EPS 04e EPS 05e EPS 06e

Consensus 2.09 2.45 2.88

AstraZeneca (USD) 20.2 17.5 14.9 16% 1.2 42.3 Carnegie 2.09 2.42 2.84

% premium vs peers 16 10 2 0 -1 -2

AstraZeneca (USD) ex GW 18.6 16.2 14.0 EPS ex GW Carnegie 2.28 2.61 3.03

% premium vs peers 7 2 -4 9 7 5

Source: Carnegie Research

Delay for blood-thinner Exanta On 23 December 2003, the commercially large indication of stroke prevention was filed in both the US and the EU (France as part of the EU Mutual Recognition Procedure). Also on 23 December 2003, AstraZeneca received its first regulatory approval for Exanta in France for the prevention of venous thromboembolic events (VTE) in major orthopaedic (hip or knee replacement) surgery. However, on 10 September 2004, the FDA’s Cardiovascular and Renal Drugs advisory committee surprisingly voted that AstraZeneca had failed to demonstrate a favourable risk-benefit profile for Exanta. The FDA will not make its final announcement until October 2004, but it usually follows its advisory committee’s recommendation. More studies are needed, which we think means a delay of at least three years.

The FDA makes an independent review of all the data submitted in the file and uses its own statisticians and medical and toxicity reviewers. This means that it can interpret the data differently and come to different conclusions from the company submitting the data, which was apparently the case here. More data is now needed to support Exanta’s US approval. As we see it, this means that large parts of the Phase III clinical programme will have to be repeated, which will take at least three years. In Europe, the short-term indication has been launched. Although now less likely, it is still possible that the long-term indication will receive European approval (not in our current forecasts), since the regulatory authorities work independently. A post-approval programme after a European launch could perhaps be used to gather safety data to support the US approval. This scenario would require fewer resources but would also take several years.

FDA advisory committee has chosen conservative route and disregarded

dangerous properties of current treatment warfarin

Large parts of the Phase III clinical

programme will have to be repeated


27 September 2004

8


There is virtually no competition in anti-thrombotic research, mostly because many developments have failed. Sanofi-Aventis has an injectable Factor Xa inhibitor (idraparinux) in Phase III clinical trials with launch possible at the end of 2005 at the earliest. Eli Lilly has a Factor Xa inhibitor that entered Phase II clinical trials in December 2003. However, Factor Xa inhibitors are not direct competitors to Exanta, which is an oral thrombin inhibitor. There is only one oral thrombin inhibitor in Phase II clinical trials – Boehringer Ingelheim’s dabigatran etexilate.

The coagulation cascade – targeted by several drugs


Anticoagulation pipeline products

Product Name Latest PhaseCompany Action Comment

Exanta Marketed AstraZeneca thrombin inhibitor Peroral formulation

Exanta Marketed AstraZeneca thrombin inhibitor Subcutaneous administartion

recombinant antithrombin III Pre-registration GTC Biotherapeutics thrombin inhibitor; cicatrizant For patients with genetic disorder

idraparinux Phase III Organon; Akzo Nobel; Sanofi-Aventis factor Xa inhibitor; oligosaccharide 1 subcutaneous injection/week, Launch expected late 2005

473178; GW 473178 Phase II GlaxoSmithKline thrombin inhibitor No administration info available, PhII initiated Q1(02)

BAY 597939 Phase II Bayer factor Xa inhibitor Peroral formulation, PhII inititated in Q1(03), launch post 2005 anticipated

dabigatran etexilate Phase II Boehringer Ingelheim thrombin inhibitor Peroral formulation, PhIIa completed Q4(02)

DX 9065a Phase II Daiichi factor Xa inhibitor Peroral formulation, PhII started Q2(02)

factor Xa inhibitors Phase II Tularik; Lilly factor Xa inhibitor Peroral formulation

HMR 2906; 2906 Phase II Sanofi-Aventis factor Xa inhibitor For acute intravenous or long term peroral use

JTV 803 Phase II Japan Tobacco factor Xa inhibitor Injectable

razaxaban Phase II Bristol-Myers Squibb factor Xa inhibitor Peroral

rNAPc2 Phase II Dendreon; Nuvelo factor VIIa inhibitor Recombinant injectable

YM 150 Phase II Yamanouchi factor Xa inhibitor Peroral formulation

odiparcil Phase II Fournier; GlaxoSmithKline indirect thrombin inhibitor Peroral

3DP 4815 Phase I 3 Dimensional Pharm.; J&J; Centocor thrombin inhibitor Peroral formulation, the agent is well tolerated

AZD 0837 Phase I AstraZeneca thrombin inhibitor Filings (MAA, NDA) expected after 2006

factor Xa inhibitor, Daiichi Phase I Daiichi factor Xa inhibitor Peroral formulation

KFA 1982 Phase I Kissei factor Xa inhibitor Prodrug, administration info not available

LB 30870 Phase I LG Chem thrombin inhibitor Peroral formulation, PhI inititated in 2001

SSR 182289; SSR 182289A Phase I Sanofi-Aventis proteinase inhibitor Peroral formulation

TGN 167 Phase I Trigen thrombin inhibitor; factor Xa inhibitor Peroral bioavailablilityTGN 255 Phase I Trigen thrombin inhibitor; factor IXa inhibitor Intravenous formulation


Virtually no competition in this area and Exanta patent expiries not until 2015,

which could prompt new studies

NovoSeven (NovoNordisk) 2003 sales DKK3.9bn

Plavix (SASY) 2003 sales EUR3.2bn,Aspirin (Bayer)

Other HaemophiliaProducts Factor VIII and IX, a USD2bn market

Direct thrombin inhibitors Exanta (oral, AZN)

Hirudin Argatroban Bivalirudin

Heparin and LMWHLovenox ( Aventis)EUR1.7bn act indirectly through antithrombin III

Warfarin inhibits synthesis of factor II, VII, IX and X (has slow onset of action)


27 September 2004


The FDA’s Cardiovascular and Renal Drugs advisory committee voted unanimously that AstraZeneca had failed to demonstrate a favourable risk-benefit profile for Exanta to prevent venous thromboembolism (VTE) in patients undergoing knee replacement surgery (the short-term indication which is approved in Europe). The committee voted 10-1, with one abstention, that AstraZeneca failed to demonstrate an acceptable risk-benefit ratio for the secondary prevention of VTE after standard treatment for an episode of acute VTE. The committee voted 11-1 that AstraZeneca failed to show an acceptable risk-benefit ratio to prevent stroke and other thromboembolic complications associated with atrial fibrillation.

For the long-term indications, the committee’s concerns focused on safety issues, particularly fatal liver toxicities, as well as trial design issues that called efficacy into question. AstraZeneca has repeatedly said that Exanta’s elevated liver enzymes did not relate to clinical events, and that only one drug-related death had occurred in the whole clinical programme. The FDA’s independent review of the data found that there had been three drug-related deaths due to liver injury from Exanta in 6,948 patients who were using the drug in the longer term. Three deaths unfortunately correlate very well with the so-called Hy’s law (see below).

Severe liver injury is defined as raised liver enzymes (alanine aminotransferase) >3x the upper limit of normal (ULN) with a concurrent increase in total bilirubin >2x ULN. During clinical development, at least 37 cases of severe liver injury were observed among patients who received Exanta. Hy Zimmerman made the observation that at least 10% of individuals with such severe drug-induced liver injury progressed to liver failure, liver transplant, or death (Hy’s law). This means that Exanta-associated fatal liver injury or liver failure could occur in as many as 1 in 2,000 patients treated in the long term. Consistent with this prediction, the three deaths the FDA found associated with severe liver injury in the long-term clinical development programme meant one fatal liver injury in 2,300 patients exposed to Exanta (n=6,948 Exanta treated patients, mean treatment duration of 357 days). In addition, since the three drug-related deaths were alleged to have taken place during clinical trials, the FDA questioned the efficiency of AstraZeneca’s drug-monitoring programme. The committee shared this view and found the programme insufficient. In the clinical development programme, severe liver injury occurred even though compliance with liver enzyme testing and drug discontinuation met or exceeded 83%, and there was no evidence that monitoring and early discontinuation of the drug at the first signs of liver toxicity could prevent severe liver injury and associated fatalities.

For the short-term indication, the committee’s concern was that the trial duration, 7–12 days, was shorter than would be used in clinical practice. The committee also said that the 4–6 week follow-up period was too short to determine the clinical relevance of an excess of cardiovascular events and of elevated hepatotoxicity measures in patients who received Exanta. The proportion of patients with coronary artery disease adverse events was statistically significantly higher in the Exanta group (32/1848, 1.7%) than in the Warfarin/placebo group (12/1859, 0.7%) in the VTE population (p=0.00411). The proportion of patients with myocardial infarction was also significantly higher in the Exanta group (13/1848, 0.7%) than in the warfarin/placebo group (3/1859, 0.16%) in the VTE population (p=0.01183). There were no appreciable differences between the treatment groups for underline diseases including hypertension, diabetes mellitus, hypercholesterolemia, coronary atherosclerosis, as well as age, gender and weight. Considering Exanta as an anticoagulant with potential to treat myocardial infarction, these results are problematic.

The three deaths correlate very well with Hy’s law

Not even the short-term indication was approved


27 September 2004

10


The stars to aid Crestor (i.e. the Galaxy programme) We believe that cholesterol reducer Crestor has a favourable risk/reward profile. However, negative publicity from consumer group Public Citizen regarding the safety of Crestor has hurt the launch and Crestor’s US market share of new prescription was flat at 7.4% for five consecutive weeks during August and early September. However, recent prescription data from the week ending September 17th showed that Crestor gained 0.3% in market share of new prescriptions to 7.7% and the dynamic market share (new and switch patients) remains at 14%, indicating that the launch still has momentum. Today, more than 10m prescriptions have been dispensed, 3m patients have been treated with Crestor (rosuvastatin) and the safety database is continuing to grow (see charts below). Thus, we believe that the safety worries regarding Crestor will eventually fade, but that it will take longer than previously expected. We currently expect Crestor sales to reach USD1.2bn in 2005 and USD1.7bn in 2006.

Crestor US dynamic share (new and switched patients)

Source: AstraZeneca

Reporting rates of rhabdomyolysis with statin therapy

Source: AstraZeneca

Crestor was hurt by Public Citizen but the launch still has momentum


27 September 2004


Reporting rates of fatal rhabdomyolysis with statin therapy

Source: AstraZeneca

We think that recent clinical data will reinforce the use of the more powerful statins (Crestor and Lipitor) over the less powerful ones (Zocor, Pravachol and Lescol). Evidence is building that lower cholesterol really is better on hard clinical endpoints. We do not expect Crestor to gain market share from Lipitor in the first place, but rather from the less powerful statins such as Zocor, Pravachol and Lescol.

Overall baselines and mean %changes from baseline (sub-group analysis STELLAR trial)Crestor (n=49-61/group) Lipitor (n=48-65/group) Zocor (n=49-62/group) Pravachol (n=58-69/group)Non-HDL-C HDL-C Non-HDL-C HDL-C Non-HDL-C HDL-C Non-HDL-C HDL-C

Base line mg/dL 234 45 234 44 231 44 231 44

10 mg -40 7.6 -34 7.2 -26a 8.3 -19a 3.3

20 mg -48 11.1 -38b 9.4 -35b 9.5 -21ab 6.9

40 mg -52 10.4 -46 5 -36bc 8 -27abc 6.4

80 mg -46 +4.7b -42c 10

Significantly different (p<.002) compared with (a) Crestor 10 mg, (b) Crestor 20 mg, (c) Crestor 40 mg

Source: ACC congress 2004, Carnegie Research

New competitive data for Crestor On 6 September, AstraZeneca presented new clinical findings at the European Association for the Study of Diabetes (EASD) in Munich, Germany. In a prospective controlled study in patients with the metabolic syndrome called Comets, Crestor lowered bad cholesterol (LDL-C) and raised good cholesterol (HDL-C) significantly more than Lipitor. The Comets study, involving nearly 400 patients, show that at a low dose of 10mg, Crestor reduces LDL-C significantly more than Lipitor 10mg and increases HDL-C nearly twice as much. The study also demonstrated that Crestor 20mg reduces LDL-C significantly more than Lipitor 20mg and increases HDL-C significantly more than Lipitor 20mg. The term ‘metabolic syndrome’ describes a cluster of three or more heart disease risk factors, including abdominal obesity, low levels of HDL-C, increased levels of triglycerides (another type of fat found in the blood), raised blood pressure and raised blood glucose. The metabolic syndrome has become increasingly common in the US. It is estimated that about 47m American adults have the metabolic syndrome and prevalence is expected to increase driven by a rise in obesity and demographics. We believe that these results will be important in the marketing of Crestor since being strong in a certain niche is a key to success in this highly competitive market place.

Evidence is building for powerful statins, i.e. Lipitor and Crestor

The galaxy study programme is continuing to demonstrate the benefits of Crestor

Patients with metabolic syndrome will be an important patient group for the success

of Crestor


27 September 2004

12


Data released on 19 April 2004, in connection with the European Atherosclerosis Society (EAS) Congress in Seville, also demonstrated that Crestor is superior to Lipitor in reducing LDL-C in patients with Type II diabetes and dyslipidaemia. The two studies presented – called Andromeda and Corall – are also part of the Galaxy study programme, investigating the benefits of Crestor in cardiovascular risk reduction and patient outcomes. Hard endpoint data for Crestor, i.e. demonstrated mortality benefits, is currently under Phase III clinical evaluation and we do not expect a filing of this indication (congestive heart failure) until 2007 at the earliest.

1. The results from Andromeda demonstrated that low doses of Crestor reduced bad cholesterol (LDL-C) by at least 50% and got more than 90% of patients with Type 2 diabetes and dyslipidaemia to the new European LDL-C goal (<2.5 mmol/L). The study also demonstrated that Crestor 10mg and 20mg reduced LDL-C by 51% and 57%, respectively, significantly more than Lipitor 10mg and 20mg (39% and 46%, p<0.001, respectively), and as a result, significantly more patients treated with Crestor 10mg and 20mg (94% and 96% respectively) achieved their LDL-C goal than those treated with Lipitor 10mg and 20mg (79%, p<0.001, and 87%, p=0.002, respectively).

2. The Corall study demonstrated that for each dose of Crestor, LDL-C was reduced significantly more than with double the dose of Lipitor; LDL-C was reduced by 46%, 51% and 54% with Crestor 10mg, 20mg and 40mg, respectively, compared with 41%, 46% and 48% with Lipitor 20mg, 40mg and 80mg, respectively (all p<0.05). The superiority of Crestor was also confirmed at 18 weeks when 90% of patients on Crestor 40mg achieved their LDL-C goal, the new European LDL-C goal (<2.5mmol/L), compared with 78% on Lipitor 80mg (p<0.05). This study is more interesting than that previously described since it demonstrates that Crestor 10mg is more effective than Lipitor 20mg and these finding should be useful for physicians in a clinical setting.

Indication/Line extension Phase Filing (EU) Filing (US)Atheroma (abnormal fatty deposit in arteries) III 2006 2006

Outcomes Congestive Heart Failure III >2006 >2006Outcomes Renal III >2006 >2006

Source: AstraZeneca

Competitor data – high potency statins really are better On 10 September, Merck’s anti-cholesterol drug Zocor suffered a setback. A major study in nearly 4,500 patients sponsored by Merck found that high doses of the drug showed no conclusive benefits in preventing new cardiac problems in heart attack patients. This was surprising since Lipitor has shown superiority in a similar setting. We think that this again reinforces the differences between statins and that high power statins could have an advantage. This study is especially important for the European market where Zocor is the market leader and generic in many countries; this should benefit Lipitor, which has positive data on hard endpoints, and perhaps also Crestor, which lowers cholesterol even more than Lipitor.

Bristol-Myers Squibb received some bad news at the American College of Cardiology (ACC) 53rd Annual Scientific Session Exposition (7–9 March) in New Orleans. Bristol-Myers Squibb’s drug Pravachol was substantially inferior to Pfizer’s Lipitor in the PROVE-IT study. We believe that this study will reinforce the use of the more powerful statins (Crestor, Lipitor and the Zetia/Zocor combination) over the less powerful ones (Pravachol and Lescol). It may provide evidence that lower cholesterol is really better on hard clinical endpoints.

More patients treated with Crestor achieve their cholesterol target than

patients treated with Lipitor

Crestor is better than double the dose of Lipitor

High doses of Zocor did not demonstrate benefits on hard clinical end-points, which

should reinforce the use of powerful statins, i.e. Lipitor and Crestor

BMS’s Pravachol failed to demonstrate non-inferiority over Lipitor – once again

supporting the use of powerful statins


27 September 2004


Bristol-Myers Squibb funded the two-year, 4,160-patient clinical trial to try to prove that Pravachol is not inferior to Lipitor. It failed and backfired badly, and the difference in outcome was even greater than anyone had expected. Patients taking 80mg of Lipitor were 16% less likely to die, have a heart attack, undergo bypass or angioplasty surgery or develop worsening chest pain than those taking 40mg of Pravachol, and the results emerged in a very short period of time.

On 4 August 2004, the FDA approved Lipitor for the prevention of cardiovascular disease by reducing heart attack risk in people with normal to mildly elevated cholesterol levels who have other cardiovascular risk factors in the US market. The approval was based on the Ascot study which found that the lowest dose of Lipitor (10mg) reduced the relative risk of heart attack by 36% compared with placebo. This is an important new indication that Crestor does not have and we expect Pfizer to use it to maintain its market-leading position, once again indicating that new market share for Crestor will mostly come at the expense of the less powerful statins.

Vytorin – is it really a new product? We do not see the Zocor/Zetia combination pill as a great threat to Crestor, because: 1) its effect on cholesterol levels is comparable to Crestor; 2) the majority of patients are doing fine on statin drugs alone (AstraZeneca has shown that eight of 10 patients reach their treatment goal on 10mg Crestor); and 3) the combination pill is an untried and untested approach with potential side effects (angio-oedema, i.e. facial swelling, a potential serious side effect, has been reported for Zetia and elevated liver enzymes for Zocor at high doses). We believe that Vytorin will be an interesting alternative for the rather limited number of patients that already use Zetia, and as a result, we do not expect any major impact on Crestor and Lipitor sales. We expect it to mainly cannibalise Zocor sales.

Merck/Schering-Plough Pharmaceuticals announced on 23 July 2004 that the FDA had approved the combination pill Vytorin (ezetimibe/simvastatin) for the treatment of primary hypercholesterolaemia or mixed hyperlipidaemia, the same indications for which Crestor is approved. Although the launch of Vytorin will increase the competition in the statin market, it is important to note that the two components of Vytorin are already available on the market under the brand names Zocor (from Merck) and Zetia (Schering-Plough). In a 24-week, multi-centre, randomised, double-blind, active-controlled, forced titration study of 788 patients, Vytorin (doses ranging from 10/10mg to 10/80mg) was compared with Lipitor monotherapy (doses ranging from 10mg to 80mg). The average LDL-C cholesterol levels at baseline across treatment groups ranged from 179mg/dL to 181mg/dL. At each pre-specified dose comparison, Vytorin lowered LDL cholesterol to a significantly greater degree than Lipitor. At the recommended usual starting doses, Vytorin 10/20mg lowered LDL-C cholesterol by 50% versus 37% for Lipitor 10mg and 44% for Lipitor 20mg.

New important indication helping Pfizer to maintain market-leading position of Lipitor

We think ombination pill Vytorin will mainly cannibalise Zocor sales: no major

impact on powerful statins

Vytorin was launched this summer by Merck and Schering-Plough


27 September 2004

14


The Zocor/Zetia combination pill compared head-to-head to Pfizer's LipitorSummary of Endpoints (Mean Percent Change from Baseline)

Period Group Treatmentn available for

analysis LDL-C HDL-C1 1 Lipitor 10 mg 250 -37.2 5.1

2 Zocor/Zetia 10 mg 252 -46.1‡ 8.0‡

3 Zocor/Zetia 20 mg 253 -50.3‡ 9.5‡

2 1 Lipitor 20 mg 235 -44.3 6.9

2 Zocor/Zetia 20 mg 239 -50.2‡ 9

3 Zocor/Zetia 40 mg 243 -54.3‡ 12.4‡

3 1 Lipitor 40 mg 228 -49.1 7.8

2&3* Zocor/Zetia 40 mg 466 -55.6‡ 11.4‡

4 1 Lipitor 80 mg 223 -52.5 6.5

2&3* Zocor/Zetia 80 mg 441 -59.4‡ 12.3‡

‡p ? 0.01 for difference with Lipitor in the specified period. *Treatment Groups 2 and 3 combined in Periods 3 and 4.


Zetia works by preventing the intestinal absorption of cholesterol, rather than inhibiting cholesterol production by the liver, and the firms have played on the fact that muscle-related disorders (myopathy and rhabdomyolysis reactions) have not been observed in Zetia patients. These potentially fatal muscle-related disorders have dogged the statin class since the withdrawal of Bayer’s Baycol. The market share of 5% captured by Zetia largely reflects the market segment unsatisfied with statins due to tolerability issues. In an unusual turn of events, Merck has said that it plans to promote Zocor to the very end, even as it promotes the new combination. This move most likely reflects Merck not being all that interested in pushing a joint venture drug that yields only half of each profit dollar. If this is the case, we believe that it will benefit Crestor further.

However, we believe that physicians will be cautious about a combination product, mainly because of potential side effects. Zetia as a single pill was launched in November 2002 and two new warnings were included in the list of adverse events in the drug labelling in July 2003. The new warnings follow post-marketing reports of hypersensitivity reactions, including rash and angio-oedema, or facial swelling, a potentially very serious condition. Despite this, Schering-Plough and Merck’s principle marketing drive for Zetia has been its improved safety over other cholesterol-lowering drugs, particularly the statins.

The Zocor/Zetia combination pillLipid Parameter, % reduction

Zocor 10mg

(n=79)

Combo10mg/10mg

(n=87)

Zocor 20mg

(n=89)

Combo 10mg/20mg

(n=86)

Zocor 40mg

(n=90)

Combo 10mg/40mg

(n=89)

Zocor 80mg

(n=87)

Combo10mg/80mg

(n=91)Total Cholesterol -20.7 -31.5 -24.1 -36.5 -28.7 -39.5 -31.7 -43

non-HDL-C -26.8 -41.3 -31.2 -47.1 -37 -50.9 -41.4 -54.8

TG (median) -4.5 -20.5 -13.6 -30.7 -18.6 -32 -25.7 -27.8

HDL-C 4.9 9.5 6.3 8 8.3 9.1 11 6.3LDL-C -31.3 -46.2 -34.9 -50.5 -41.5 -54.9 -45.6 -60.8


Zetia prevents absorption of cholesterol in the intestine in contrast to statins who

inhibit cholesterol production in the liver


27 September 2004


Cholesterol market and players USDm 2001 2002 2003 % growth 02/01 03/02

Lipitor sales 6,448 7,972 9,231 24% 16%

US 4,423 5,336 5,826 21% 9%

RoW 2,025 2,636 3,405 30% 29%

Zocor sales 5160 5445 5012 6% -8%

US 3164 3187 3,144 1% -1%

RoW 1996 2258 1,868 13% -17%

Pravachol sales 2,101 2,266 2,467 8% 9%

US 1,295 1,311 2,085 1% 59%

RoW 806 955 382 18% -60%

Lescol sales 502 553 734 10% 33%

US 239 250 309 5% 24%

RoW 263 303 425 15% 40%

Crestor sales 129 n.a

US 62 n.a

RoW 67 n.a

Total 14,211 16,236 17,573 14% 8%

Total US 9,121 10,084 11,426 11% 13%

Total RoW 5,090 6,152 6,147 21% 0%


Seroquel – important new indication for first in class drug Seroquel, an atypical antipsychotic, has been marketed very successfully worldwide as a treatment for schizophrenia and is now overtaking J&J’s Risperdal for the top spot position in the US market with more than 26% of new prescriptions. During 2003, Seroquel had annual sales of USD1.5bn and the market for antipsychotics is currently growing around 10%. Fuelled by new indications and off-label use, the market could be worth as much as USD15bn–20bn by 2011. Bipolar disorder has a major impact on the ability to function in daily life and the disease is estimated to cost society USD45bn annually. Hence, we believe that there is substantial potential for Seroquel in this indication. Recent clinical data indicates that Seroquel could gain the upper hand in bipolar disorder since it could have an effect on both depression and mania, whereas competitors are mostly indicated for short-term treatment (<3weeks) in mania (see table below). The exception is Eli Lilly’s Zyprexa, which is indicated for both acute and maintenance use in mania, but we expect this drug to lose market share due to the prevalence of side effects.

Seroquel is ranked number two among anti-psychotics but still accelerating…

…and sales will be boosted further by a new indication: bipolar disorder


27 September 2004

16


NRX Antipsychotics

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Risperdal Zyprexa Seroquel Geodon Abilify

Source: IMS Health

Price and indications for atypical antipsychoticsBrand name Company Indication Usual Dose US Price/day

Abilify BMS Schizophrenia 10-15mg/day USD10.1

Risperdal Janssen Cilag Schizophrenia 3 mg bid USD12

Bipolar Mania (acute<3weeks) 2-3mg/day USD9.5-12

Zyprexa EliLilly Schizophrenia 10mg/day USD9.5Bipolar Mania (acute and maintenance)) 10-15mg/day USD9.5-14Agitation Associated with Schizophrenia and Bipolar I Mania 10mg injection na

Geodon Pfizer Schizophrenia 20mg bid USD9.3

Bipolar Mania (acute <3 weeks) 40mg bid USD9.3Agitation Associated with Schizophrenia and Bipolar I Mania 10-20mg injection na

Seroquel AstraZeneca Schizophrenia 150-200mg bid USD8.7-10.9Bipolar Mania (acute <12weeks) 200mg bid USD10.9

Source: RxUSA and Carnegie Research

Bipolar disorder, also known as manic-depressive illness, is a brain disorder that causes unusual shifts in a person’s mood, energy and ability to function. The symptoms of bipolar disorder are severe and the disorder affect approximately 3% of the adult population in the developed world. Because bipolar disorder is a recurrent illness, long-term preventive treatment is strongly recommended and almost always indicated. Medications known as mood stabilisers are usually prescribed to help control bipolar disorder. There are several types of mood stabilisers available, with Lithium and Valproate the most commonly used drugs today. However, research studies are continuing to evaluate the potential mood-stabilising effects of newer medications including atypical antipsychotics such as Seroquel.

On 13 October 2003, Seroquel was approved for the treatment of mania associated with bipolar disorder in Europe, and the same indication was approved by the FDA in January 2004. The approval was based on the results from clinical trials in around 1,000 patients in 28 countries. Two of these studies demonstrated that Seroquel in monotherapy is as effective as currently used mood stabilisers for bipolar mania but had a superior tolerability profile. A third study showed that Seroquel as an adjunctive (add-on) therapy was more effective than mood stabilisers alone to treat bipolar mania. We believe that the superior tolerability demonstrated with Seroquel is very important in the clinical setting, since a large portion of treated patients discontinue treatment as a consequence of side effects. Therefore a superior tolerability is likely to lead to a lower discontinuation rate and thus help to prevent disease relapse and suicide.

Bipolar disorder, also known as manic depressive illness, is a common and serious

disorder

Clinical data supports the use of Seroquel for bipolar mania


27 September 2004


On 5 May 2004, AstraZeneca published new data from the first large-scale clinical trial (the Bolder study) to examine Seroquel as a treatment for depressive episodes in patients with bipolar disorders. In a double-blind, placebo controlled trial involving 542 patients with bipolar disorders who were randomised to receive eight weeks of treatment with Seroquel (300 or 600 mg/day) or placebo, results demonstrated that patients on Seroquel had a significant improvement in their depression as assessed by MADRS and Hamilton rating scales. Also, about 50% of patients receiving Seroquel achieved remission from their bipolar depression symptoms. Significant improvement was also seen on quality of life and quality of sleep at all time points throughout the 8-week study. Seroquel is currently not approved by the FDA for use in bipolar depression, but we believe that these results will increase the off-label use as previously seen with Seroquel in sleeping disorders.

Seroquel bipolar depression

Source: AstraZeneca

On 22 July 2004, the FDA approved a 12-week label for Seroquel in bipolar mania. This means that except for EliLilly’s Zyprexa (approved for maintenance therapy) Seroquel is the only drug in its class to be approved for prolonged monotherapy of acute bipolar mania, i.e. up to 12 weeks of treatment (competitors are approved only for a maximum of three weeks). Pooled results from the two double blind randomised 12-week trials that the label approval was based on, showed that 66% of patients treated with Seroquel responded to treatment compared with 40% in the placebo group (p<0,001). After 12 weeks, 65.4% of Seroquel treated patients achieved remission versus 35.9% in the placebo group (p<0.001). The effect of Seroquel monotherapy beyond 12 weeks is under investigation and filing for this indication is not expected until 2007 at the earliest. However, we believe that it will be used off label since physicians are unlikely to discontinue the drug after 12 weeks if it works.

New studies also indicate a positive effect in bipolar depression

Seroquel was recently indicated for prolonged treatment of acute bipolar mania


27 September 2004

18


Seroquel bipolar mania

Source: AstraZeneca

Seroquel and competitors

Risperdal Zyprexa Geodon Abilify Seroquel

J&J Eli Lilly Pfizer Bristol Myers-Squibb AstraZeneca

Fast onset of action (1week) yes yes yes yes yes

Long-term efficacy yes yes yes yes yes

Efficacy in partial responders yes yes ? ? yes

Placebo like EPS no no no no yes

Placebo like prolactin no no no yes yes

No significant OTc changes yes yes no yes yes

Weight neutral long-term no no yes yes yes

Placebo like nausea/vomiting no yes no no yes

Source: AstraZeneca

Also on 22 July 2004, AstraZeneca announced data showing that Seroquel may be an effective option for the treatment of agitation associated with dementia, including Alzheimer's disease, in the elderly patient population. The study named Stars, presented at the 9th International Conference on Alzheimer's Disease and Related Disorders in Philadelphia, show that elderly patients with dementia who were treated with Seroquel, experienced improvement in symptoms of agitation. Additionally, patients treated with Seroquel showed no cerebrovascular adverse events, which have been associated with the use of some other atypical antipsychotics in this patient population. This 10-week double-blind randomised trial showed that patients receiving Seroquel 200mg/day experienced significantly reduced symptoms of agitation compared to placebo (PANSS-EC scores) in three analyses (p<0.05). In addition, the clinical relevance of this improvement was confirmed by the improvement in CGI-C scores (p<0.02) in the Seroquel 200mg/day group compared with placebo in all four analyses. Additional results presented at this conference, further support the findings that Seroquel has an attractive cardiovascular side effect profile compared with other drugs in the same class.

On 24 September 2004, the European Stanley Foundation Conference on Bipolar Disorder presented new data showing that Seroquel is significantly more effective than placebo in treating patients with rapid-cycling bipolar disorder. The 8-week, double-blind, placebo-controlled study is a sub-analysis of 108 patients with rapid-cycling from a larger Seroquel trial known as Bolder. The results found that significantly more patients receiving Seroquel were classified as responders at the final assessment (week 8) compared with

Seroquel also has a positive effect on agitation associated with dementia

Seroquel has proved effective in the most serious form of bipolar disorder: rapid-

cycling


27 September 2004


placebo (58% versus 36.1%, p<0.001) and that the median time to response was significantly shorter with Seroquel than placebo (p<0.001). The study also showed that significantly more patients met the remission criteria at the final assessment compared with placebo (52.9% versus 28.4%, p<0.001). Rapid-cycling affects up to one in five people with bipolar disorder and is characterised by the occurrence of four or more episodes of depression, mania or hypomania, cycling within 12 months. Patients with rapid-cycling often experience more severe symptoms of depression and are more difficult to treat than non-rapid-cycling patients.

Indication/Line extension Phase Filing (EU) Filing (US)Sustained release III 2006 2006

Bipolar maintenance III >2006 >2006Bipolar depression III >2006 >2006

Source: AstraZeneca

Bristol-Myers Squibb launched its new atypical antipsychotic drug Abilify in December 2002. The drug is approved for treatment of schizophrenia but not for bipolar disorder. In 2003, Abilify sales equalled USD283m. It appears that this new entrant has affected mainly Zyprexa and Johnson & Johnson’s Risperdal; it does not seem to have had any great effect on Seroquel, which appears to be holding the best-in-class profile on side effects; the most important are less extra-pyramidal symptoms, nausea, and vomiting. Potential new entrants in this class are Wyeth/Solvay’s Bifeprunox (potential file 2005e) and Pfizer/Organon’s Asenapine (file 2006e).

Symbicort – US filing expected in 2005 Asthma is a chronic lung condition characterised by difficulty in breathing that affects more than 15m people in the US alone and the incidence is on the rise. People with asthma have extra sensitive airways. They react by narrowing or obstructing when they become irritated. This is caused by airway inflammation (meaning that the airways in the lungs become red, swollen and narrow) and broncho-constriction (meaning that the muscles that encircle the airways tighten or go into spasm). Thus, asthma can be treated using both anti-inflammatory drugs that reduce the inflammation in the lungs, and broncodilating drugs that resolve spasm of surrounding muscles. Symbicort is a dry powder inhaler that combines the rapid acting and long-lasting broncodilating effect of Oxis (formoterol) with the anti-inflammatory steroid Pulmicort (budesonide) in one single inhaler device. Symbicort is currently approved in 80 countries around the world, including Europe, for the treatment of asthma and competes directly with GSK’s (GlaxoSmithKline) top selling product Advair/Seretide (GBP2,2bn sales in 2003 growing 39%). Although Symbicort is not approved in the US, sales rose 84% to USD549m in 2003, its market share is around 25% in Europe. Driven by the launch of the improved variable dosing concept called SiT (single inhalation therapy) in Europe during Q3(04), and a possible US filing in 2005, we estimate this product to grow by 55% in 2004, 15% in 2005, and by 44% to USD1.4bn in 2006.

Symbicort Turbohaler asthma - differentiation vs Seretide/Advair

Symbicort Seretide

Maintenance treatment yes yes

Age range 6+ years 4+ years

No of strengths 3 3

Rapid onset yes no

Adjustable dosing (with same inhaler) yes no

Once daily dosing with all strengths yes no

Source: AstraZeneca

BMS’s new drug Abilify has not dented Seroquel’s uptake

Asthma affects 15m people in the US and incidence is on the rise

Symbicort is competing head-to-head with GSK’s blockbuster Seretide/Advair


27 September 2004

20


New data from GSK was presented at the annual European Respiratory Society (ERS) Congress on September 6th. The results from the Excel study, a head to head trial comparing Seretide with Symbicort in the treatment of asthma exacerbations conducted in over 1,000 patients, demonstrate that there was no significant difference between the two treatments in the primary endpoint of all exacerbations over the six month period. However, post hoc analysis showed that there was a 30% lower annualised rate of moderate/severe exacerbations on Seretide compared with Symbicort (p=0.059). This was most apparent in the last two months of the trial, where the rate of moderate/severe exacerbations was 57% lower for patients treated with Seretide than with Symbicort and this difference was statistically significant (p=0.006). This post hoc analysis was conducted when in the primary endpoint, it was observed that the rate of all exacerbations decreased with time. Although this study will be used by GSK for marketing purposes, we do not expect the results to have any major impact on Symbicort sales growth since the primary end-point did not reveal any difference between the two treatments. In addition, Symbicort has previously shown superiority over Advair/Seretide. At the 2003 World Allergy Organization’s International Congress of Allergology and Clinical Immunology (ICACI), it was shown that the rate of severe exacerbations is 40% lower in asthma patients on Symbicort adjustable dosing than in patients on GSK’s fixed dosing (7-month Sund study involving 658 patients with moderate asthma). This significant reduction in exacerbations suggests that switching 100 similar patients from Seretide fixed dosing to Symbicort adjustable dosing would prevent 20 severe exacerbations in the next year. Severe exacerbations are defined as exacerbations requiring oral steroid treatment for at least three days, an emergency room visit or hospitalisation.

Symbicort is currently in Phase III development in the US for asthma and chronic obstructive pulmonary disease (COPD) – also known as smoker’s disease. Since the US market is a spray market compared with the inhaler market in Europe, AstraZeneca will file Symbicort using a spray device called pMDI (pressurised metered dose inhaler). We expect an application for the asthma indication in H1(05), while the COPD indication is at least a year behind and will thus be filed in 2006 at the earliest.

Asthma combination therapiesBrand name Company Indications

Symbicort AstraZeneca US: Not approved, Asthma filing 2005e, COPD filing >2006

EU: Asthma in pateints>6 years old and COPD (smokers disease)

Seretide/Advair gsk US: Asthma in patients>4 years old and COPD (smokers diesease)EU: Asthma in patients>4 years old and COPD (smokers diesease)


Nexium – line extensions to be completed soon Line extensions offer an additional opportunity to expand the use of Nexium, which had worldwide sales of USD3.3bn in 2003. In January 2004, AstraZeneca submitted regulatory applications in the US and Europe for healing and prevention of NSAID-associated ulcers. In the US alone, an estimated 15m–20m people use NSAIDs on a long-term basis and approximately 15–30% of them develop peptic ulcers. Acid in the stomach plays an important role in NSAID-associated peptic ulcers and Nexium has been shown to provide more effective acid suppression compared with other PPIs (proton pump inhibitors). In clinical trials, Nexium has demonstrated that it is effective in preventing the development of gastric and duodenal ulcers in long-term users of NSAIDs, including COX-2-selective NSAIDs (i.e. Vioxx and Celebrex), who are at risk of ulcer development. Clinical trials also demonstrate that Nexium is effective in healing gastric ulcers in patients who require continuous NSAID treatment, including COX-2 selective NSAIDs.

New data from GSK’s head-to-head study with Symbicort and Seretide

We expect filing of Symbicort in the US during 2005

A successful line extension programme will be completed soon


27 September 2004


Despite generic omeprazole and OTC Prilsoec we still see Nexium doing well, sales growth in Q2(04) was impressive 19%. Market growth ex-omeprazole is currently around 9-12%. Beyond 2004 we regard Nexium as a mature product growing in line with the market.

US PPI market – TRx extended unit growth trends

Source: AstraZeneca

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H2 antagonists Prilosec Prevacid Aciphex

Protonix Nexium Generic Prilosec

Source: IMS Health

On 16 September 2004, AstraZeneca announced that the mutual recognition process in Europe for the indication described above had been successfully finalised. AstraZeneca is now awaiting individual national approvals. Going forward, we are awaiting approval for this indication in the US during H2(04) or early 2005. Since most of Nexium’s line extensions have been approved or close to approval, we expect sales to grow by 19% in 2004 and in line with the market thereafter.

Indication/Line extension Phase Filing (EU) Filing (US)NSAID Gastrointestinal side effects – symptom resolution III Promotable Filed

Parenteral formulation (IV) III Approved Filed

NSAID Gastrointestinal side effects – healing & prevention III Approved FiledExtra-oesophageal reflux disease II >2006 >2006

Source: AstraZeneca


27 September 2004

22


Iressa – exciting prospects Iressa is indicated as monotherapy for the treatment of patients with locally advanced or metastatic NSCLC (non-small cell lung cancer) after failure of both platinum-based and docetaxel chemotherapies. The approval of Iressa is based on objective response rates, survival data is pending (Isel study in Q1(05e)). Roche/Genentech presented positive survival data with potential competitor product Tarceva at ASCO (American Society of Clinical Oncology) in July 2004. This study met its primary endpoint of improving overall survival with patients on Tarceva living longer than those in the placebo arm. The trial also met secondary endpoints including improving time to symptomatic deterioration, progression-free survival and response rate. Although no head-to-head studies have been performed, we believe that Tarceva has similar efficacy, but more side effects than Iressa (rash and diarrhoea). We also believe that increased survival will be regarded as a class effect and will help to boost Iressa’s sales in 2004, especially since the “Iressa expanded access program” data presented at ASCO 2004 – although not a prospective trial – showed similar survival data as Tarceva. We expect Tarceva to be launched in Q1(05), but as both products have similar profiles, we believe that AstraZeneca’s first-mover advantage and the potential survival data in Q1(05e) will keep Iressa two steps ahead. Both products are also being investigated in a broad range of cancers.

Tarceva survival study (NCIC CTG BR.21) Iressa expanded access programTarceva Placebo Iressa

No patients 488 243 21,064

1 year survival 31% 22% 30%

Median survival (months) 6.7 4.7 5.3

Overall tumour response 9% < 1% 14% in the IDEAL 2 study (250mg dose)

Disease stage of patients Stage II (50%) and stage III (50%) Stage III (27%) and IV (73%)

Discontinuation due to side effects 5% 2% 1.1%

Comment Less sick patients than in the Iressa program Better survival seen in women, asian/oriental patients, and stage III patients

Source: Carnegie Research, ASCO

Competitor Tarceva to be launched in Q1(05e) Like Iressa, Tarceva is a small molecule designed to target the human epidermal growth factor receptor 1 (HER1) pathway, which is one of the factors critical to cell growth in many cancers. HER1, also known as EGFR, is a key component of the HER signalling pathway, which plays a role in the formation and growth of numerous cancers. Tarceva is designed to inhibit the tyrosine kinase activity of the HER1 signalling pathway inside the cell, which may block tumour cell growth. Positive results of a Phase III trial of Tarceva in pancreatic cancer were released on September 20th 2004. This international study demonstrated a statistically significant 23.5% improvement in overall survival for patients with locally advanced or metastatic pancreatic cancer when compared with overall survival in patients receiving gemcitabine plus placebo. These results are promising since the prognosis for pancreatic cancer patients generally is poor, with most studies showing 5-year survival of less than 5%. Furthermore, early-stage trials of Tarceva are being conducted in other solid tumours, such as ovarian, colorectal, head & neck, renal cell carcinoma, glioma and gastrointestinal cancers.

Iressa survival data expected in Q1(05) is key to long-term success…

....since future competitor Tarceva presented positive survival data in Q2(04)

Roche will launch Tarceva during Q1(05)


27 September 2004


Ongoing Iressa studies Trial name Objective/Setting Phase StatusNCIC CTG BR19 Adjuvant IRESSA in Patients With Completely Resected

Primary Stage IB, II, or IIIA Non-Small Cell Lung CancerIII Recruiting

ISEL (709) IRESSA Survival Evaluation in Lung Cancer III Completed recruitment

IBREESE (710) IRESSA vs BSC Randomised Evaluation of Effect on pulmonary Symptom Endpoint

III Recruiting

INTEREST (721) IRESSA NSCLC Trial Evaluation Response and Survival vs Taxotere

III Recruiting

711 IRESSA+BSC vs BSC in chemo-naive patients with advanced NSCLC and poor performance status)

II Set-up phase

INVITE IRESSA in NSCLC vs Vinorelbine Investigation in The Elderly

II Recruiting

Source: AstraZeneca

On 13 September, AstraZeneca announced that it had started to recruit patients for the new clinical trial for NSCLC to evaluate the effectiveness of Iressa versus Taxotere (docetaxel) in a head-to-head comparison in patients with locally advanced or metastatic NSCLC who have previously received platinum-based chemotherapy. This trial is called Interest and is the first study to compare Iressa with chemotherapy in this patient population. The primary objective of the study is to compare the overall survival of patients taking Iressa to those taking the chemotherapy Taxotere. This trial will also compare the safety, tolerability and effects on patients with Iressa and Taxotere chemotherapy use. The results of this trial may ultimately help to determine whether Iressa can be used as a substitute for chemotherapy.

In addition to the Interest trial there are currently five ongoing clinical studies evaluating Iressa in NSCLC (se table). We believe Isel is the most important from a commercial perspective. The objective of Isel is to compare Iressa plus best supportive care (BSC) with placebo plus BSC in terms of overall survival in patients with previously treated locally advanced or metastatic NSCLC. In this Phase III double-blind, placebo-controlled, randomised, multicentre trial an estimated 1,600 patients have been randomised. Apart from survival data, secondary endpoints are time-to-treatment failure, overall objective tumour response (RECIST criteria for radiographical response), tolerability, and patient-reported quality of life. As described earlier, we expect results from this trial to be announced in Q1(05).

An extensive clinical programme is ongoing to expand the use of Iressa….


27 September 2004

24


Recent clinical findings, new indications for Iressa Iressa is a new and innovative drug with a novel mechanism of action. Iressa is therefore an interesting area for researchers in oncology and several studies using Iressa have been published in the last year. We have selected clinical findings that we believe are the most important from a commercial perspective. Of these, the potential genetic test to select patients suitable for Iressa treatment has caught a lot of attention and will be discussed separately below.

Selected results presented at ASCO (American Society of Clinical Oncology):

1. In a study including more than 21,000 NSCLC patients who received Iressa through AstraZeneca’s expanded access programme in the US, results demonstrated a 1-year survival rate of 29.9% and a median survival of 5.3 months. Historical data show that patients treated with third- or fourth-line chemotherapy (Iressa is currently indicated for 3-line use) have a 1-year survival rate of just 5.5%. However, effective chemotherapy results in 1-year survival rates of about 30% in consenting patients with advanced and recurrent NSCLC who are able to tolerate chemotherapy. Thus, a 1-year survival rate in over 20,000 patients treated with Iressa on a compassionate basis is comparable to that obtained with chemotherapy in a second-line clinical setting. Reported safety was also favourable compared with chemotherapy. These findings are also consistent with the two large randomised Phase II trials (IDEAL 1 and 2) indicating that Iressa has an attractive risk/reward profile compared with second-line chemotherapy with a potential to broaden its current use. The survival benefit of Iressa in a controlled clinical setting is currently under investigation and results are anticipated in Q1(05).

2. The largest study ever conducted on patients with bronchioalveolar cancer (BAC), a type of NSCLC, on Iressa was also presented at ASCO. BAC represents about 4% of all NSCLC cases, but treatment options are scarce, indicating interesting market potential. 138 eligible patients (102 chemo-naive, 36 previously treated) were enrolled in this study. Patients received 500 mg of Iressa until evidence of progression or drug toxicity. The results demonstrated that among the 69 treatment naive patients with measurable disease, the response rate was 19% and 6% had a complete response. Among the 22 previously treated patients with measurable disease, the response rate was 9%. Furthermore, the median survival was 12 and 10 months for chemo-naive and previously treated patients, respectively (p=NS). One year survival was about 50% in each subgroup. We can conclude that Iressa demonstrated single-agent activity in advanced BAC in both chemo-naive and previously treated patients, but we believe that further studies are warranted until any major contribution to sales from this patient group will be visible.

3. Phase I results from a study using Iressa in head & neck cancer suggest that Iressa is very well-tolerated in patients with incurable head & neck cancer. Phase III trials are currently ongoing to evaluate the efficacy of Iressa in head & neck cancer and we do expect a filing for this indication in 2006. Treatment options for incurable metastatic and/or locally recurrent head & neck cancer are limited, and platinum based therapy yields response rates of only 30% and a median survival of 6–7 months.

4. Preliminary results from early clinical evaluations of Iressa in combination with chemotherapy for patients with metastatic colorectal cancer demonstrate that Iressa in combination with chemotherapy represents an active regimen with response rates that are very encouraging compared with previously reported results using chemotherapy alone. This indication is being investigated further in Phase II trials and a possible filing is not expected until 2007 at the earliest.

…and several studies have been presented during the past year

Expanded access programme using Iressa in NSCLC patents resulted in a 1-year

survival rate of 30%

Patients with BAC responded to Iressa treatment…

…but more studies are needed to support use in this patient group

Iressa is well tolerated among head & neck cancer patients

Encouraging results using Iressa in metastatic colorectal cancer


27 September 2004


Implications of a genetic test Iressa works very well in around 15% of lung cancer patients. To find out why, researchers tested the tumours of lung cancer patients who had been helped by Iressa and compared them with the tumours of patients who had not been helped. They found a mutation in the EGFR gene (epidermal growth factor receptor) and these results were published on 29 April in The New England Journal of Medicine. In the cases where there were no responses, there was no mutation. Mutations were more frequent in women, in Japanese patients, and in patients with adenocarcinoma. These findings will help determine which patients will benefit from Iressa and which should not receive it. Researchers are now planning to examine other cancers to see whether they, too, have EGFR mutations that could be targeted by Iressa. Possibilities include a brain tumour called glioblastoma and head and neck cancer.

In our view, the major implications of a genetic test are as follows:

1. It would be possible to find the 15% of patients of the whole NSCLC population who respond well to Iressa. This would mean that treatment could start earlier, i.e. Iressa could be used as a first-line treatment in this patient group as opposed to its current use as a third-line, late-stage treatment. Iressa would be more effective and have fewer side effects than standard chemotherapy since it works against specific mutations involved in cancer, which compares with the broad approach of chemotherapy that kills many healthy cells along with the cancer.

2. Treatment time per patient would most likely expand dramatically since the responders live much longer and Iressa would be a chronic medication in this patient group. It is currently difficult to estimate for how long patients will live, but for illustrative purposes, we have assumed at least 12 months of treatment time, as opposed to the current four months in the late-stage population (the current third-line use includes both responders and non-responders). The increase in treatment time would more than compensate for the lower number of patients treated.

3. It would be easier to find new indications since a test could be used to select potential responders among patients for clinical trials.

Iressa is currently approved as a last resort treatment in advanced lung cancer (third-line use after failure of surgery and chemotherapy in NSCLC). In our sales model for Iressa, we estimate that around 30% of all NSCLC patients reach this stage and become eligible for treatment, i.e. around 50,000 patients in the US. If we assume first-line treatment and a penetration rate of 15%, this would indicate 25,000 patients on Iressa. However, on average, the very sick patients who reach third-line treatment live 4-5 months. Four months of Iressa costs around USD6,240 in the US. If we assume first-line treatment of the responder group, the treatment time would most likely be extended dramatically. For illustrative purposes, we have assumed 12 months of treatment time. These assumptions would double our current US sales estimate for Iressa in 2006.

Iressa US sales assuming first-line treatment of subgroup responders and 12 months survival

2002 2003 2004e 2005e 2006e

US sales (USDm) 294 367 477 562

No. of NSCLC patients 141,906 157,000 163,280 169,811 176,604 CAGR 4%

% of patients have mutated EGFR gene 15 15 15 15 15

Iressa penetration (%) 50 60 75 85

Cost for 12 months of therapy (USD) 24,960 24,960 24,960 24,960


New data indicates that 15% of NSCLC patients respond to Iressa treatment…

…and these patients can be identified using a genetic test

Fewer patients treated would be offset by longer treatment time and possible first-

line use

Responders live longer

A genetic test would be beneficial for Iressa sales


27 September 2004

26


AstraZeneca has no immediate plans to change how Iressa is marketed since more research is needed. In addition, it may not always be easy to run the needed DNA tests on patients, since the mutation is present only in the cancer cell. Current tests would require obtaining a quality tumour biopsy sample for testing. Many lung cancer patients do not have tumour samples available, making this type of testing difficult.

Arimidex – expanded use in early breast cancer Breast cancer is the most common cancer to affect women. In 2004, it is estimated that about 275,000 new cases will be diagnosed in the United States. The medicines for treating breast cancer fall into two groups: hormones and chemotherapy. Whether the patient receives hormone therapy or chemotherapy will depend on the size of the tumour, the type of tumour, and if it has spread to involve the lymph glands. Tumours can be classified into oestrogen sensitive and oestrogen insensitive tumours. It is estimated that about 75% of all breast cancer cases are hormone sensitive, i.e. need oestrogen to stay alive. The most commonly used medicine against oestrogen sensitive tumours is tamoxifen (AstraZeneca drug Nolvadex, generic since 2002). Tamoxifen is an anti-oestrogen in its effect on breast cancers and works by stopping oestrogen getting to the cancer cells. It appears to be a very safe medicine but can cause side effects, which can be distressing, and these include flushing (similar to those women experience during the menopause), vaginal dryness, and vaginal discharge.

New data announced on 3 December 2003 at the San Antonio Breast Cancer Symposium, US, questioned the role of tamoxifen as a standard adjuvant therapy for postmenopausal women with hormone-sensitive early breast cancer. The results from the Impact study suggest that patients who change their adjuvant therapy from tamoxifen to Arimidex after two to three years are less likely to experience a return of breast cancer than those who complete a five-year course of tamoxifen. In addition, those patients who change to Arimidex experience significantly fewer serious side effects than those who remain on tamoxifen. This data reinforced the findings of earlier studies, which showed Arimidex to be a more effective treatment, with an overall more favourable tolerability profile than tamoxifen for newly diagnosed postmenopausal women with early breast cancer.

Arimidex is currently approved for first-line use in advanced breast cancer in postmenopausal women and as an adjuvant treatment of postmenopausal women with hormone receptor positive early breast cancer. Arimidex is currently the most widely used aromatase inhibitor in the world with sales of USD372m during 2003. After the publication of the results described above, we expect the use of Arimidex to increase in the early treatment of breast cancer. This will fuel sales growth of Arimidex for several years to come as the early breast cancer market could be worth as much as USD2bn. Hence, we forecast sales growth of 40% for 2004 and 15% for 2005 and 2006.

Aromatase inhibitorsBrand name Company Indications (US)

Femara Novartis 1-line treatment of HR+ or HR unknown locally advanced or metastatic breast cancer. Advanced breast cancer in postmenopausal women with disease progression following antioestrogen therapy.

Aromasin Pfizer Advanced breast cancer in postmenopausal women whose disease has progressed following tamoxifen therapy.

Arimidex AstraZeneca Adjuvant treatment of postmenopausal women with HR+ early breast cancer. 1-line treatment of HR+ or HR unknown locally advanced or metastatic breast cancer. Advanced breast cancer in postmenopausal women with disease progression following tamoxifen therapy.


It will take time until a genetic test is used in day-to-day clinical practice

Breast cancer is the most common cancer to affect women

Tamoxifen is still standard therapy for hormone sensitive breast cancer

New data questions tamoxifen as golden standard therapy

Arimidex currently used for advanced breast cancer but new data will boost

earlier use


27 September 2004


Only one real competitor – Femara from Novartis In January 2004, the FDA approved Femara for first-line treatment of postmenopausal women with hormone receptor positive or hormone receptor unknown locally advanced or metastatic breast cancer. This was based on a head-to-head trial comparing the use of Femara versus tamoxifen in more than 900 postmenopausal women with locally advanced (stage IIIB), metastatic breast cancer, or recurrences not amenable to treatment with surgery or radiotherapy. The study demonstrated that Femara delays progression of advanced breast cancer for 9.4 months, compared with 6.0 months for tamoxifen. The results also indicated significant differences between Femara and tamoxifen with respect to overall tumour response rates (30% versus 20%), clinical benefit (49% versus 38%) and time to treatment failure (9.1 months versus 5.7 months/40 weeks versus 25 weeks). Also, the study found that Femara and tamoxifen were equally well tolerated. Femara is building its case but we believe Arimidex will maintain its lead.

Atacand – clinical data more than charming Data presented at the European Society of Cardiology’s annual meeting demonstrated that Atacand reduces both cardiovascular deaths as well as hospital admissions for heart failure, across a broad spectrum of patients with chronic heart failure. We believe that the data from the CHARM study (chronic heart failure indication) is superior to the data presented by competitors (Novartis’s Diovan and Merck’s Cozaar/Hyzaar) and will fuel Atacand’s growth for years to come. Novartis’s cardiovascular drug Diovan has been growing strongly (sales of USD2.4bn in 2003, with an annual growth rate of 38%) despite the fact that its chronic heart failure indication is limited to patients who are intolerant of ACE inhibitors. Atacand is one of AstraZeneca’s growth products currently indicated for hypertension with sales of USD750m in 2003 and an annual growth rate of 32%. Regulatory filings in the US and Europe based on the outcomes of the CHARM programme were submitted in Q1(04).

The Candesartan in Heart Failure – Assessment of Reduction in Mortality and Morbidity (CHARM) Programme, which recruited 7,601 patients, is the largest ever trial programme conducted in heart failure with an AT1-receptor blocker. Patients with classic symptomatic chronic heart failure – depressed left ventricular systolic function (Left Ventricular Ejection Fraction <40%) – were randomised into one of two studies: either an ACE-inhibitor intolerant population or the population treated with ACE-inhibitors. Atacand showed an overall reduction of 23% (p<0.0004) in the risk of a cardiovascular event (death or hospitalisation) in chronic heart failure patients who were not taking ACE inhibitors due to previous intolerance. This is comparable to the benefits seen in heart failure studies using ACE-inhibitors alone. In patients who were prescribed conventional therapy for chronic heart failure including an ACE inhibitor, Atacand demonstrated additional mortality and morbidity benefits. Atacand produced an additional reduction in the risk of cardiovascular death or hospitalisation for chronic heart failure of 15% (p=0.011) compared with conventional treatment alone. Importantly, Atacand demonstrated this efficacy, along with a high level of tolerability, when taken as part of a triple combination therapy that included an ACE-inhibitor and beta-blocker – standard treatments in patients with chronic heart failure.

Competitor Femara from Novartis has proved superior to tamoxifen

Data from the CHARM study (chronic heart failure indication) is superior to data

presented by competitors


27 September 2004

28


Research pipeline

Galida – high potential in diabetes The market for oral Type II diabetes treatments is worth approximately USD8bn. It is estimated that there are about 171m cases of diabetes in the world, many still undiagnosed, and this number could rise to 300m by 2025.

Statins and PPAR agonists complement each other

Reduce Reduce Reduce Increase slightly No effect

No effect No effect Reduce Increase Reduce

Second generation statins

PPAR dual agonists (alpha/gamma)

Totalcholesterol

LDL Triglycerides/

VLDLHDL

Insulin

resistance

Reduce Reduce Reduce Increase slightly No effect

No effect No effect Reduce Increase Reduce

Second generation statins

PPAR dual agonists (alpha/gamma)

Totalcholesterol

LDL Triglycerides/

VLDLHDL

Insulin

resistance


The insulin sensitisers related to the glitazone class (Eli Lilly’s Actos, with sales of USD1.4bn in 2003, and GlaxoSmithKline’s Avandia, together with Avandamet, with sales of USD1.5bn in 2003) are the latest major drug class in this area to reach the market. They act mainly on the PPAR-gamma receptor (perixosome proliferator-activated receptor gamma), located in tissue cells targeted by insulin (such as adipose, muscle and liver cells). PPAR-gamma activates genes involved in glucose regulation, transport and utilisation. The net effect is an increase in the response to insulin, i.e. an insulin-sensitising effect. PPAR activators can also have the additional effect of lowering circulating levels of fatty acids. A related receptor, PPAR-alpha, is involved in the regulation of lipids. A drug with dual action on both PPAR-alpha and PPAR-gamma could possibly target a wide indication area and would have considerable potential with peak sales of above USD1bn.

The results from a Phase II safety and efficacy study in 500 patients with Type II diabetes showed that Galida reduces postprandial triglycerides in a dose-dependent manner; a reduction in triglycerides of 41% was seen at a dose of 1mg, a reduction of 30% at 0.5mg and a reduction of 20% at 0.25mg. Galida is orally active, well absorbed, shows high protein binding and minimal metabolism. Food has no effect and no inhibition of CYP450 (indicating a favourable drug interaction profile) is seen. Phase II data on Galida confirms dual PPAR; alpha/gamma activity that results in improvement in dyslipidaemia and improvement of glycaemic control. We expect US and European filings in 2006, which should drive sales to USD55m in 2007 and to USD146m in 2008.

Galida has considerable potential

Regulatory filings for Galida in Europe and US expected in 2006


27 September 2004


Three studies presented in posters at ADA (2003)1. CYP450 interaction A study found no inhibition of any of the seven CYP450 enzymes.2. PK A study in eight healthy adult males found rapid and complete

absorption, complete bioavailability, no safety concerns and

a low potential for clinically significant drug-drug interactions

by inhibition of CYP450. The PK profile indicated once-daily

dosing is possible.

3. Food/PK A study in 28 healthy males found the drug was well-toleratedand food did not significantly affect its absorption.

Source: Trends-in-Medicine, June 2003

On 3 September 2004, AstraZeneca announced that the clinical trial recruitment milestone of 1,200 subjects had been reached in the relationship between insulin sensitivity and cardiovascular disease risk study – a study using the euglycaemic clamp technique to examine whether insulin resistance predicts cardiovascular disease, as well as future development of Type II diabetes. This study began in February 2002 and we expect initial results to be published by 2005.

Physicians with whom we have conferred have emphasised the great need of new treatments that increase insulin sensitivity and improve glycaemic control and highlight the significant potential for a drug with dual action on both PPAR-alpha and PPAR-gamma. Dual PPAR-alpha/gamma agonism may lower plasma free fatty acids more than either PPAR-alpha or PPAR-gamma alone. Given the central role of free fatty acids in the development of insulin resistance and Type II diabetes, this approach offers an attractive option for therapeutic intervention. Earlier studies have shown promising results and we expect Galida to hold great treatment benefits.

Pipeline productsProduct Name Latest Phase Company Action Commentrosiglitazone + glimepiride Pre-registration GlaxoSmithKline PPAR agonist; sulfonylurea; fixed comb. Ongoing Phase III trials in Europe

muraglitazar Phase III Bristol-Myers Squibb; Merck PPAR agonist; insulin sensitiser Phase III trials initiated in 2H(03) in US

tesaglitazar Phase III AstraZeneca PPAR agonist; insulin sensitiser Filings expected in 2006

LY 818 Phase II Ligand; Lilly PPAR agonist Phase II initiated in the US in 2003

CLX 0921 Phase I Calyx Therapeutics insulin sensitiser; PPAR agonist Phase I trials have completed

LY 929 Phase I Ligand; Lilly PPAR agonist Phase I ongoing in the USGW 544 Phase I GlaxoSmithKline; Ligand PPAR agonist In Phase I trials in the US


Several agents currently in development hold promise for the treatment of insulin resistance and, ultimately, cardiovascular disease. The dual PPAR-alpha/gamma agonists are currently furthest along in development. On 28 April 2004, Bristol-Myers Squibb announced that it expected to submit muraglitazar within the next nine to twelve months for US regulatory approval. However, we believe that there is room for several players in this large and growing market. Safety will be a critical issue with this new class of drugs as a number of promising candidates have already failed due to adverse toxic events. Based on the data that we have seen so far, we believe that Galida has properties that should make it very competitive compared with other marketed products.

Diabetes is a chronic condition that occurs when the pancreas does not produce enough insulin or when the body cannot effectively use the insulin it produces. Hyperglycaemia and other related disturbances in the body’s metabolism can lead to serious damage to many of the body’s systems, especially the nerves and blood vessels. There are two basic forms of diabetes:

Earlier studies have shown promising results

We believe Galida (Phase III) has a very competitive profile


27 September 2004

30


• Type I: People with this type of diabetes produce very little or no insulin and require daily injections of insulin to survive.

• Type II: People with this type of diabetes cannot use insulin effectively. They can sometimes manage their condition with lifestyle measures alone, but oral drugs are often required, and less frequently insulin, in order to achieve good metabolic control.

Approximately 3.2 million deaths can be attributed to diabetes each year. More than 65% of deaths in diabetes patients are attributed to heart and vascular disease. People with diabetes also develop cardiovascular complications at an earlier age, are two to four times more likely to suffer strokes, and about 73% of adults with diabetes are considered prehypertensive. Current treatments for Type II diabetes try to increase insulin production from the pancreas or normalise insulin sensitivity and increase the uptake of glucose to cells. In most cases, the effect of these drugs is insufficient and does not last. Consequently, the incidence of other diseases caused by Type II diabetes remains high. In addition, these diseases are becoming more common in younger age groups, increasing the need for new and better treatments.

Galida - dose dependent reduction in postprandial triglycerides (n=185)

-45

-40

-35

-30

-25

-20

-15

-10

-5

00.1mg (p<0.01) 0.25mg (p<0.01) 0.5mg (p<0.0001) 1mg (p<0.0001)

% c

hang

e in

pos

tpra

ndia

l tri

glyc

erid

es


Better access to preventive care, more widespread diagnosis and more intensive disease management could significantly improve the quality of life for people with diabetes and potentially reduce national expenditures for health care services. Thus, the potential for Galida is significant.

Cerovive – a tantalising opportunity for stroke treatment In Q2(03), AstraZeneca started Phase III clinical trials for Cerovive (formerly known as NXY-059) as a potential therapy for ischemic stroke (caused by blood clots as opposed to haemorrhagic strokes, which are caused by ruptured blood vessels in the brain). In our opinion, Cerovive could be filed in 2006, but only insignificant sales are included in our forecasts. This is a true first-in-class compound with a high development risk, but also very high commercial potential (USD1bn–2bn in revenues) since there are no good treatments available today. The market for stroke compounds is worth over USD3bn, but the direct costs for these patients in the US health care systems are estimated at around USD18bn. AstraZeneca has in-licensed the substance from Renovis (formerly Centaur). Cerovive is thought to act by trapping reactive oxygen species, thereby preventing neuronal damage occurring after a stroke.

A true first-in-class compound with a high development risk, but also very high

commercial potential


27 September 2004


In a placebo-controlled Phase II study, two Cerovive dosing regimens were administered within 24 hours of acute stroke. Cerovive was found to be well tolerated in patients with an acute stroke at or above concentrations shown to be neuroprotective in an animal model when initiated four hours after the onset of permanent focal ischaemia. Cerovive was administered as either 915mg over one hour followed by 420mg/hour for 71 hours (low dose) or 1,820mg for one hour followed by 844mg/hour for 71 hours (high dose); plasma concentrations were monitored. Neurological and functional outcomes were recorded for up to 30 days. A total of 135 patients were recruited, of whom 134 received study treatment and completed assessments (844mg/hour, n=39; 420mg/hour, n=48; placebo, n=47). The mean age was 69 years (range: 34–92 years) and the baseline National Institutes of Health Stroke Scale score was 8.5. Of the patients, 11% had current atrial fibrillation, 13% had current diabetes mellitus and 50% were hypertensive.

Cerovive dataCerovive 844 mg/h Cerovive 420 mg/h Placebo total Placebo part 1 Placebo part 2

No. of adverse events 71 144 130 83 47

No. of patients (%) with adverse events 29 (74%) 42 (88%) 39 (83%) 22 (88%) 17 (77%)

No. of SAE reports assessed as related 0 1 3 2 1

to study treatmentDeaths (% of patients) 0 (0%) 4 (8%) 3 (6%) 3 0

Source: Carnegie Research, Lees et al, Stroke 2003 34:482-487

Treatment was stopped early in the trial because of adverse events in three patients (6%) in the placebo group and one patient (2%) in the low-dose group. While there were fewer adverse events in the high-dose group, there were no significant differences among the groups. This study was not designed to examine the effect of the drug on stroke outcome, but mainly to investigate safety. A good outcome – defined as a modified Rankin Scale score of 0 or 1 – was seen in 53% (high dose), 29% (low dose) and 40% (placebo). No safety concern was identified in the analysis of body temperature, blood pressure, or other laboratory parameters. The unbound plasma concentration at steady state was 260+/-79mcmol/L, exceeding the target of 200mcmol/L in the high-dose group.

Cerovive (NXY-059) Serious adverse events

Deaths Treatment discontinuations

Good outcome (Rankin Scale 0 or 1)

High dose 3 0 0 53%

Low dose 17 4 1 29%

Placebo 13 3 2 40%

Source: Carnegie Research, Less et al, Stroke 2003 34:482-487

On 27 May 2003, AstraZeneca announced that it had begun two major Phase III pivotal trials to determine the effect of Cerovive on disability and neurological recovery in acute ischaemic stroke patients. The clinical trial programme – known as the Saint (Stroke - Acute Ischaemic - NXY Treatment) trials – will compare the efficacy and safety of a 72-hour intravenous infusion of Cerovive given within six hours of the onset of symptoms, versus a placebo. Two multinational, multi-centre, double-blind, randomised, placebo-controlled, parallel-group studies will enrol over 3,000 patients. The Saint-I trial will involve 200 centres across 24 countries in Europe, Asia, Australia and South Africa. The Saint-II trial will involve patients from approximately 150 sites in the US, Canada and South America. Initiation of the Saint trials is based on data from animal models of AIS in both rodents and small primates. In the rodent models, Cerovive was administered as late as five hours after ischaemia and, in the latter models, as late as four hours after a permanent ischaemic insult, where both the short- (three weeks) and long-term (ten weeks) functional outcomes were assessed as well as the extent of brain injury.

Filings for Cerovive (Phase III) in US and Europe expected in 2006


27 September 2004

32


The Independent Data Monitoring Board has plans to review interim data on safety and patient outcomes from the Phase III trials later this year, the result of which will lead to further recommendations during 2004 regarding the continuation and conduct of the Cerovive clinical programme. In August 2004, AstraZeneca commenced a clinical trial designed to assess the safety and tolerability of intravenous infusion of Cerovive in adult patients with acute intracerebral haemorrhage. This multinational, multi-centre trial is expected to involve 600 patients.

Stroke is the third leading cause of death in the western world. Around 88% of all strokes are caused by a sudden blockage of arteries in the brain (ischaemic stroke), while the less common haemorrhagic stroke is caused by a broken blood vessel. In an ischaemic stroke, the primary damage to the brain is irreversible and untreatable, because cells die when a region of the brain is deprived of more than 80% of its normal blood flow. It is a high medical need area but also an area littered with failed drug candidates. The failures have been due less to poor understanding of the molecular mechanisms of strokes than to poor patient characterisation, underestimation of toxicology problems, and wrong treatment time windows. Only Activase (tPA from Genentech, marketed as Actilyse by Boehringer Ingelheim, US approval 1996, European approval 2002) is available to treat strokes, but it must be given within three hours of the onset of the stroke. This limits its use, since at three hours most patients have not reached hospital. Activase dissolves blood clots and works by restoring blood flow to the brain, but it does not prevent the damage done to

Pipeline productsProduct Name Latest Phase Company Indication Commentdisufenton sodium Phase III Renovis; AstraZeneca stroke Estimated filing 2006

sinnabidol Phase III Hebrew University; Pharmos cognitive defect; stroke; trauma; myocardial infarction; glaucoma; Ph III initiated Q3(03) (traumatic brain injury)

multiple sclerosis; Parkinson disease

APO 99 Preclinical Apotex stroke; ischemia; reperfusion injury Potential in stroke but still in pre-clinical trials

synthetic catalytic scavenger analogues Preclinical Eukarion; GlaxoSmithKline stroke; trauma; atherosclerosis; neurodegeneration; asthma Protective against stroke in animal model

OC 5186 Preclinical Philadelphia Biomedical Res. Inst. cancer; stroke; malaria Free radical scavenger for stroke and trauma

SLH 301 Preclinical Kings College; BTG neurodegeneration; arthritis; reperfusion injury; psoriasis; stroke Too early-stage to pose a threat, preclinical ph. inititated 1995


the brain by the onset of the stroke. As blood flow is restored, brain cell destruction continues, since damaging substances (so-called free radicals, formed as oxygen returns to the cells) are released in the process. Although initial damage to brain tissue occurs within the first hour, much of the damage occurs subsequently up to three days after the stroke. A combination of neuroprotectants and thrombolytics will likely be the best approach to deal with strokes. Cerovive is thought to work by attracting and binding to the free radicals, thereby protecting the brain cells. Activase remains the only drug indicated for the treatment of stroke. As a result, we believe that Cerovive has great potential due to the large unmet medical need.

Pre-clinical data show that Cerovive preserves function and brain tissue, otherwise irreversibly damaged, when administered after the onset of permanent ischaemia in a model of acute stroke. The compound is thought to act by trapping reactive oxygen species, thereby preventing neuronal damage occurring after a stroke.

Stroke is the third leading cause of death in the western world

Pre-clinical data shows that Cerovive preserves function and brain tissue


27 September 2004


Exciting research portfolio AstraZeneca has a number of important agents in development, particularly for the treatment of cancer and cardiovascular diseases. The projects cover a wide variety of disease areas with large unmet medical needs, creating significant risk diversification. The strategy for sustainable growth is an expansion of the development pipeline through improved in-house discovery processes coupled with complementary external collaborations and partnerships. We believe that there are several high-potential R&D projects in AstraZeneca’s research portfolio.

Strong oncology pipeline AstraZeneca holds the second position in oncology in terms of sales and has a long track record in the area. The CAGR (1991–2001) for its oncology sales was 13%. The area is competitive but there is still a large unmet high medical need. Cancer is the second biggest cause of death (one in four deaths) and 10m people are diagnosed annually. 22m people are currently living with the disease and 6m die every year. The number of patients is increasing with an ageing population and improved diagnostics. Novel treatments are needed, especially to improve long-term patient survival and drugs with fewer side effects.

Multiple approaches to fight cancer

Source AstraZeneca

ZD6474 (Phase II) – an angiogenesis inhibitor The inhibition of tumour blood vessel formation (a process called angiogenesis) is an innovative approach to cancer management, which is showing promise. ZD6474 is designed to inhibit signalling by the VEGF receptor (the same receptor Genentech’s Avastin works on), a critical step in the process of driving new blood vessel formation. This novel, orally active, small-molecule inhibitor of VEGF receptor-2 tyrosine kinase is currently in Phase II trials in breast cancer, non-small cell lung cancer (NSCLC), SCLC and myeloma. Combination trials in NSCLC with taxotere are also ongoing.

ZD6474 has shown promising activity in a variety of murine and human xenograft tumour models. Pre-clinical data in a lung tumour model showed that ZD6474 (50 or 100mg/kg/day) inhibited the tumour vessel formation by 63% and 79%, respectively (p<0.001). Its dose is limited by QTc prolongation. ZD6474 also has some inhibitory activity against epidermal growth factor receptor (EGFr) tyrosine kinase, which could give it a competitive advantage besides being an oral treatment (Avastin is an injectable).

AstraZeneca holds a strong position in oncology

ZD6474 is currently in Phase II clinical trials with filings expected after 2006


27 September 2004

34


On 26 February 2004, the FDA approved Avastin for colorectal cancer. In August, it added a black box warning to the compound due to serious adverse events (the development of gastrointestinal perforation and wound dehiscence, in some instances resulting in fatality; incidence 2%). This of course offers opportunities for novel safer treatments.

AZD2171 (Phase I) – an angiogenesis inhibitor This angiogenesis inhibitor is in Phase I trials for the treatment of solid tumours and haematological malignancies. It shows activity against VEGF receptors 1, 2 and 3. Studies are being planned for acute myeloid leukaemia (AML) and prostate cancer.

ZD4054 (Phase II) – an anti-proliferative agent This endothelin antagonist works by inhibiting the ETA receptor, which is responsible for tumour cell proliferation. It is currently in Phase II development for solid tumours (prostate cancer). We believe that it has the potential to be an oral treatment and could be used for chronic treatment. With a successful trial outcome, we expect regulatory filings in Europe and the US after 2006.

Promising Phase II projects AstraZeneca has several Phase II projects under development. Novel research in atrial fibrillation includes AZD7009, a new antiarrhythmic in Phase II clinical development that works mainly on the atria to restore and maintain normal heart rhythm (sinus rhythm) in patients with atrial fibrillation. AZD7009 has: 1) positive proof of principle demonstrated in patients; 2) clear dose dependence and statistically significant increase of atrial effective refractory period; 3) considerably less profound corresponding effect on ventricles; 4) very low pro-arrythmic potential in animal studies and confirmed potential in patients. We believe AZD7009 could have significant sales potential since this is an area where new treatments are needed.

R&D portfolioCompound Mechanism Indication Phase EU filing US filingAZD6140 ADP receptor antagonist arterial thrombosis II >2006 >2006

AZD7009 antiarrhythmic IV atrial fibrillation - conversion II >2006 >2006

AZD7009 antiarrhythmic oral atrial fibrillation - maintenance II >2006 >2006

AZD9056 ion channel blocker rheumatoid arthritis II >2006 >2006

AZD9056 ion channel blocker osteoarthritis II >2006 >2006

AZD0865 potassium-competitive acid blocker acid related GI disease II >2006 >2006

AZD7371 functional GI disorders II >2006 >2006

ZD0947 K+ channel opener overactive bladder II >2006 >2006AZD8129 (AR-A2) 5HT1B antagonist anxiety/depression II >2006 >2006

Source: AstraZeneca, Carnegie Research

Furthermore, research in thrombosis includes AZD6140, an oral anti-platelet therapy in Phase II trials. With a novel mechanism of action, AZD9056 is currently in clinical Phase II development targeted at rheumatoid arthritis. AZD9056 for osteoarthritis is also in Phase II clinical development. Currently early-stage compounds, regulatory filings in Europe and US are not expected until after 2006.

Novel research in atrial fibrillation includes AZD7009, a new antiarrhythmic

Research in thrombosis includes AZD6140, an oral anti-platelet therapy in Phase II


27 September 2004


Mid-term research pipeline Compound Mechanism Phase Rationale Market potential* (USD)

Cardiovascular Galida PPAR agonist III Diabetes/metabolic syndrome 1bn-3bn

AZD6140 ADP receptor antagonist II Arterial thrombosis 1bn-3bn

AZD7009 Antiarrhythmic IV, antiarrhythmic oral II Atrial fibrillation - conversion, atrial fibrillation - maintenance 1bn-2bn

AZD0837 Thrombin inhibitor I Thrombosis

AZD7806 IBAT inhibitor I Dyslipidaemia

AZD9684 CPU inhibitor I Thrombosis 1bn-2bn

AZD4619 Not disclosed I Dyslipidaemia

Neuroscience Cerovive Free radical trapping agent III Stroke 1bn-3bn

ZD0947 K+ channel opener II Overactive bladder 300m-1,000m

AZD8129 5HT(1beta) antagonist II Anxiety/depression 1bn-2bn

AZD4282 NMDA antagonist I Neuropathic pain

Oncology ZD6474 Angiogenesis inhibitor (VEGFR-TKI) II Solid tumors 300m-500m

ZD4054 Endothelin A receptor antagonist II Solid tumors 300m-500m

AZD2171 Angiogenesis inhibitor (VEGFR-TKI) I Solid tumors and haematological malignancies 300m-500m

AZD0530 SRC kinase inhibitor I Solid tumors

AZD3409 Farnesyl-transferase inhibitor (FAR) I Solid tumors

AZD5438 Selective cyclin dependent kinase inhibitor I Solid tumors

AZD6244 MEK inhibitor I Solid tumors

Gastrointestinal AZD0865 Potassium-competitive acid blocker II Acid related GI disease 1bn-3bn

AZD7371 Not disclosed II Functional GI disorders 300m-500m

AZD3355 Inhibitor of transient lower oesophageal I Gastroesophageal reflux disease (GERD)


AZD9343 Inhibitor of transient lower oesophageal I GERD


Respiratory/ AZD9056 Ion channel blocker II Rheumatoid arthritis 500m-1500m

Inflammation AZD9056 Ion channel blocker II Osteoarthritis 1bn-2bn

AZD8309 Chemokine receptor antagonist I Rheumatoid arthritis

AZD8955 Collagenase inhibitor I Osteoarthritis

AZD8309 Chemokine receptor antagonist I COPD

AZD9056 Ion channel blocker I COPD

Source: AstraZeneca, Carnegie Research*


27 September 2004

36


Early stage research pipeline (Pre-clinical)Compond Mechanism Indication

Cardiovascular AZD6610 Not disclosed Dyslipidaemia

AZD0303 Not disclosed Thrombosis

AZD8294 Not disclosed Dyslipidaemia

AZD8677 Not disclosed Diabetes/metabolism

Neuroscience AZD1080 Not disclosed Alzheimer's disease

AZD3102 Not disclosed Alzheimer's disease

AZD2858 Not disclosed Alzheimer's disease

Oncology AZD4440 Vascular targeting agent Solid tumours

AZD9935 Angiogenesis inhibitor (VEGFR-TKI) Solid tumours

ZD6126 Vascular targeting agent Solid tumors

AZD0424 SRC kinase inhibitor Solid tumors

AZD1152 Aurora kinase inhibitor Solid tumors

Respiratory/ AZD3342 Protease inhibitor COPD

Inflammation AZD2098 Not disclosed Asthma

AZD1981 Not disclosed Asthma

AZD0902 Ion channel blocker Rheumatoid arthritis

AZD3778 Chemokine receptor antagonist Asthma/rhinitis

AZD6067 Protease inhibitor COPD

AZD6703 Not disclosed Rheumatoid arthritis

AZD6357 Not disclosed Osteoarthritis

Source: AstraZeneca, Carnegie Research


27 September 2004


Interim figures

Sales 2003 2004USDm Q1 Q2 Q3 Q4 Q1 Q2 Q3e Q4e 2003 2004e 2005e 2006e

Losec 692 742 631 528 540 531 475 429 2,565 1975 1481 1259

Nexium 835 631 1,000 836 935 891 1,035 1,068 3,302 3929 4283 4668

Total Gastrointestinal 1,545 1,390 1,649 1,387 1,496 1,439 1,530 1,523 5,943 5988 5854 6026

Seloken 368 380 286 246 333 320 315 440 1,280 1408 1521 1445

Atacand 206 152 185 207 209 216 240 250 750 915 1,098 1,318

Crestor 3 9 76 41 129 207 270 194 129 800 1200 1680

Exanta 0 0 2 15 3 20 50 95

Total Cardiovascular 969 967 984 990 1,055 1,193 1,264 1,315 3,910 4827 5422 6053

Pulmicort 251 239 184 294 282 244 220 328 968 1074 1096 1151

Rhinocort 90 96 86 92 81 100 105 114 364 400 420 441

Symbicort 122 127 128 172 188 205 210 248 549 851 979 1370

Total Respiratory 563 552 485 661 648 639 619 776 2,261 2682 2841 3299

Zoladex 193 213 224 239 213 226 245 255 869 939 957 1005

Casodex 189 228 230 207 229 249 260 287 854 1025 1086 1151

Arimidex 93 143 136 147 166 191 195 201 519 753 865 995

Iressa 19 47 70 92 93 103 115 134 228 445 622 778

Faslodex 22 15 19 21 26 23 30 30 77 109 136 170

Total Oncology 581 690 722 750 762 834 874 930 2,743 3,400 3,785 4,216

Seroquel 444 270 345 428 448 488 460 478 1487 1874 2248 2631

Total Neuroscience 560 331 433 551 560 600 565 593 1,909 2,318 2,712 3,113

Sales growth Y/Y Q1 Q2 Q3 Q4 Q1 Q2 Q3e Q4e 2003 2004e 2005e 2006e

Losec -42% -34% -47% -53% -22% -28% -25% -19% -45% -23% -25% -15%

Nexium 141% 36% 108% 22% 12% 41% 3% 28% 67% 19% 9% 9%

Total Gastrointestinal 0% -13% -3% -24% -3% 4% -7% 10% -11% 1% -2% 3%

Seloken 59% 84% 42% -6% -10% -16% 10% 79% 42% 10% 8% -5%

Atacand 38% 18% 41% 29% 1% 42% 30% 21% 32% 22% 20% 20%

Crestor 4200% 2200% 255% 373% 550% 50% 40%

Exanta 193% 90%

Total Cardiovascular 2% 9% 17% 11% 9% 23% 28% 33% 10% 23% 12% 12%

Pulmicort 11% 20% 23% 24% 12% 2% 20% 12% 19% 11% 2% 5%

Rhinocort 43% 19% 9% 21% -10% 4% 22% 24% 22% 10% 5% 5%

Symbicort 126% 87% 78% 64% 54% 61% 64% 44% 84% 55% 15% 40%

Total Respiratory 27% 23% 24% 23% 15% 16% 28% 17% 24% 19% 6% 16%

Zoladex 3% 9% 9% 16% 10% 6% 9% 6% 9% 8% 2% 5%

Casodex 54% 54% 22% 13% 21% 9% 13% 39% 33% 20% 6% 6%

Arimidex 43% 81% 43% 60% 78% 34% 43% 36% 57% 45% 15% 15%

Iressa 0% 169% 124% 389% 119% 64% 45% 240% 95% 40% 25%

Faslodex 88% 73% 31% 18% 53% 58% 41% 120% 41% 25% 25%

Total Oncology -1% 25% 17% 10% 31% 21% 21% 24% 16% 24% 11% 11%

Seroquel 35% 3% 76% 20% 1% 81% 33% 12% 30% 26% 20% 17%

Total Neuroscience 31% -4% 59% 27% 0% 81% 30% 8% 27% 21% 17% 15%



27 September 2004

38


Financial statements Profit & loss 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

Sales na 11,318 15,134 15,583 16,222 17,841 18,849 21,381 22,798 24,989COGS na na na -3,960 -4,198 -4,520 -4,469 -4,811 -5,015 -5,373Gross profit na na na 11,623 12,024 13,321 14,380 16,570 17,782 19,616Other income & costs na -7,951 -10,495 -6,776 -7,180 -8,354 -8,976 -10,539 -11,012 -11,890EBITDA na 3,367 4,639 4,847 4,844 4,967 5,404 6,031 6,771 7,726Depreciation PPE 0 -700 -756 -585 -617 -705 -989 -1,045 -1,185 -1,264Other amortisation 0 0 0 0 0 0 0 0 0 0EBITA 0 2,667 3,883 4,262 4,227 4,262 4,415 4,986 5,585 6,462GW amortisation & Impairment 0 -121 -313 -287 -255 -255 -304 -310 -310 -310

EBIT na 2,546 3,570 3,975 3,972 4,007 4,111 4,676 5,275 6,152Net interest na 47 -4 135 105 30 91 91 101 138Other financial items 0 0 0 0 0 0 0 0 0 0Net financial items na 47 -4 135 105 30 91 91 101 138Share of earnings in ass. comp. 0 534 -10 0 0 0 0 0 0 0EAFI na 3,127 3,556 4,110 4,077 4,037 4,202 4,767 5,376 6,291Other EO items 0 62 -1,938 0 0 0 0 0 0 0Pre-tax profit 0 3,189 1,618 4,110 4,077 4,037 4,202 4,767 5,376 6,291Taxes na -907 -697 -1,453 -1,160 -1,177 -1,143 -1,297 -1,462 -1,711Post-tax minorities interest 0 -3 0 -9 -11 -24 -23 -14 -14 -14Net profit na 2,279 921 2,648 2,906 2,836 3,036 3,457 3,900 4,566Adj.Net profit na 2,338 3,172 2,935 3,363 3,441 3,340 3,767 4,210 4,876

EO items 0 62 -1,938 0 -202 -350 0 0 0 0Tax on EO items 0 0 0 0 0 0 0 0 0 0

Sales growth Y/Y na na 33.7% 3.0% 4.1% 10.0% 5.6% 13.4% 6.6% 9.6%EBITA growth Y/Y na +chg 45.6% 9.8% -0.8% 0.8% 3.6% 12.9% 12.0% 15.7%EBITDA margin na 29.7% 30.7% 31.2% 29.7% 27.8% 28.7% 28.2% 29.7% 30.9%EBITA margin na 23.6% 25.7% 27.4% 25.9% 23.9% 23.4% 23.3% 24.5% 25.9%Tax rate na 28.4% 43.1% 35.4% 28.5% 29.2% 27.5% 27.2% 27.2% 27.2%

Cash flow 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

EBITDA na 3,367 4,639 4,847 4,844 4,967 5,404 6,031 6,771 7,726Net financial items na 47 -4 135 105 30 91 91 101 138Non cash adjustments 0 1,200 779 -162 634 292 613 -8 262 339Change in NWC na -77 -219 483 -1,006 305 -1,101 644 -553 -854Paid taxes na -775 -1,020 -648 -792 -795 -886 -1,297 -1,462 -1,711Operating cash flow (OCF) 0 3,762 4,175 4,655 3,785 4,799 4,121 5,461 5,118 5,638CAPEX PPE 0 -1,255 -1,468 -1,347 -1,385 -1,543 -1,597 -1,508 -1,613 -1,726CAPEX other intang. assets na na na na na na na na na naNet cash flow (NCF) na 2,507 2,707 3,308 2,400 3,256 2,524 3,953 3,505 3,912Other investments/Divestments 0 -2,127 715 661 -158 156 35 37 39 41Dividend paid 0 -995 -1,242 -1,220 -1,236 -1,234 -1,334 -1,359 -1,509 -1,693Share issues & buybacks 0 103 29 19 35 -1,154 -1,107 -2,000 -2,000 0Other non-cash adjustments 0 0 -254 -608 260 -806 771 0 0 0Change in LT non-IB liabilities na na -182 -400 -994 -118 -345 0 0 0Decrease in net IB debt 0 -512 1,773 1,760 307 100 544 631 35 2,260

Balance sheet 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

Goodwill 0 2,440 3,736 2,959 2,700 2,807 2,884 2,537 2,189 1,838Other fixed intangible assets 0 0 0 0 0 0 0 0 0 0PPE 0 6,281 5,981 4,957 5,409 6,597 7,536 7,962 8,352 8,774Shares & participations 0 0 0 0 0 0 0 0 0 0Other fixed financial assets 0 353 185 3 23 46 220 220 220 220Other fixed assets 0 0 0 0 0 0 0 0 0 0Fixed assets na 9,074 9,902 7,919 8,132 9,450 10,640 10,719 10,760 10,832Inventories 0 2,029 2,156 2,105 2,402 2,593 3,022 2,993 3,192 3,498Receivables 0 3,963 4,470 3,960 4,139 4,845 5,960 5,345 5,699 6,247Other current assets 0 0 0 0 0 0 0 na 0 0Cash & cash equivalents 0 3,412 3,288 4,450 3,823 4,688 3,951 5,237 5,755 8,547Current assets na 9,404 9,914 10,515 10,364 12,126 12,933 13,576 14,646 18,293Total assets na 18,478 19,816 18,434 18,496 21,576 23,573 24,295 25,406 29,124

Shareholders' equity 0 10,929 10,302 9,521 9,586 11,172 13,178 13,276 13,667 16,540Minorities 0 53 40 21 43 54 79 93 107 121Sub-ordinated loans 0 0 0 0 0 0 0 0 0 0Convertibles 0 0 0 0 0 0 0 0 0 0Deferred tax 0 0 0 0 0 0 0 0 0 0Other IB & Non IB provisions 0 1,045 1,253 1,068 1,600 1,773 2,266 2,138 2,280 2,499LT IB debt 0 761 739 631 635 328 303 318 334 351LT non-IB liabilities 0 40 463 296 152 34 52 52 52 52LT liabilities na 1,846 2,455 1,995 2,387 2,135 2,621 2,508 2,666 2,902ST IB debt 0 377 378 214 321 516 152 385 410 450Payables 0 1,600 1,614 1,604 0 0 0 0 0 0Other ST non-IB liabilities 0 3,673 5,027 5,079 6,159 7,699 7,543 8,033 8,555 9,112Current liabilities na 5,650 7,019 6,897 6,480 8,215 7,695 8,418 8,966 9,561Total liabilities na 18,478 19,816 18,434 18,496 21,576 23,573 24,295 25,406 29,124



27 September 2004


Share data & key ratios Per share data (USD) 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

Adj. no. of shares in issue YE (m) 0.00 1779.0 1776.0 1768.0 1758.0 1733.0 1709.0 1650.0 1610.0 1610.0Diluted no. of Shares YE (m) 0.00 1783.0 1779.0 1770.0 1761.0 1733.0 1709.0 1650.0 1610.0 1610.0EPS na 1.28 0.52 1.50 1.65 1.64 1.78 2.09 2.42 2.84EPS adj. na 1.31 1.78 1.66 1.91 1.99 1.95 2.28 2.61 3.03CEPS na 1.44 1.12 1.99 2.14 2.19 2.53 2.92 3.35 3.81DPS na 0.56 0.70 0.70 0.77 0.77 0.80 0.91 1.05 1.21BVPS na 6.1 5.8 5.4 5.5 6.4 7.7 8.0 8.5 10.3BVPS ex. GW 0.00 4.77 3.70 3.71 3.92 4.83 6.0 6.5 7.1 9.1NAVPS na na 5.8 5.4 5.5 6.4 7.7 8.0 8.5 10.3NIBDPS na -1.47 -1.32 -2.04 -1.64 -2.24 -2.17 -2.88 -3.25 -4.95

Valuation 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

P/E YE na na >50 33.2 27.7 21.6 27.2 20.2 17.5 15.0P/E adj. YE na na 23.1 30.0 23.9 17.8 24.7 18.6 16.2 14.0P/E average na na >50 28.7 28.2 24.9 22.7 20.2 17.5 15.0P/E adj. average na na 22.5 25.9 24.4 20.5 20.6 18.6 16.2 14.0P/CEPS YE na na 36.6 24.9 21.4 16.1 19.1 14.5 12.7 11.1P/BV YE na na 7.10 9.24 8.39 5.47 6.27 5.27 5.00 4.13P/BV ex. GW YE na na 11.14 13.40 11.68 7.31 8.03 6.52 5.95 4.64Dividend yield YE na na 1.7% 1.4% 1.7% 2.2% 1.6% 2.2% 2.5% 2.9%Dividend Payout Ratio na 43.8% 135.2% 46.8% 46.7% 47.1% 44.8% 43.6% 43.4% 42.6%

EV/EBIT YE na na 19.9 21.2 19.6 14.3 19.2 14.0 12.0 9.8EV/EBITA YE na na 18.3 19.8 18.5 13.4 17.9 13.1 11.3 9.4EV/EBITA adj. YE na na 18.3 19.7 17.7 12.4 17.9 13.1 11.3 9.4EV/Sales YE na na 4.7 5.4 4.8 3.2 4.2 3.1 2.8 2.4EV/EBITDA YE na na 15.3 17.4 16.1 11.5 14.6 10.8 9.3 7.8Share price YE 41.2 49.7 45.7 35.3 48.3 42.3Share price high 45.7 51.1 50.5 51.4 49.1 50.3Share price low 34.4 32.4 42.5 28.2 29.5 41.6Share price average 40.1 42.9 46.5 40.7 40.3 46.6

Margins 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

Gross margin na na na 74.6% 74.1% 74.7% 76.3% 77.5% 78.0% 78.5%EBITDA margin na 29.7% 30.7% 31.2% 29.7% 27.8% 28.7% 28.2% 29.7% 30.9%Adj. EBITDA margin na 29.7% 30.7% 31.2% 31.0% 29.8% 28.7% 28.2% 29.7% 30.9%EBITA margin na 23.6% 25.7% 27.4% 25.9% 23.9% 23.4% 23.3% 24.5% 25.9%Adj. EBITA margin na 23.6% 25.7% 27.4% 27.2% 25.8% 23.4% 23.3% 24.5% 25.9%Pre-tax margin na 28.2% 10.7% 26.4% 25.1% 22.6% 22.3% 22.3% 23.6% 25.2%Net margin na 20.1% 6.1% 17.0% 17.9% 15.9% 16.1% 16.2% 17.1% 18.3%Adj. net margin na 20.7% 21.0% 18.8% 20.7% 19.3% 17.7% 17.6% 18.5% 19.5%

Profitability 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

ROE na 41.7% 8.7% 26.7% 30.4% 27.3% 24.9% 26.1% 29.0% 30.2%Adj. ROE na 42.8% 29.9% 29.6% 35.2% 33.2% 27.4% 28.5% 31.3% 32.3%Adj. ROCE pre-tax na na 34.3% 41.5% 44.1% 41.7% 35.1% 36.8% 40.0% 41.5%Adj. ROIC aft-tax na 29.1% 15.9% 20.4% 23.4% 20.7% 17.7% 19.0% 21.3% 23.6%Adj. ROA pre-tax na na 21.1% 23.7% 25.0% 23.6% 20.1% 21.3% 23.0% 24.4%FCF yield na 3.5% 3.7% 4.6% 3.3% 4.5% 3.5% 5.4% 4.8% 5.4%

Capital eff./Solv. 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

Inventories / Sales na 9.0% 13.8% 13.7% 13.9% 14.0% 14.0% 14.0% 14.0% 14.0%Receivables / Sales na 17.5% 27.9% 27.0% 25.0% 25.2% 27.0% 25.0% 25.0% 25.0%Payables / Sales 0.0% 7.1% 10.6% 10.3% 4.9% 0.0% 0.0% 0.0% 0.0% 0.0%NWC / Sales na 19.4% 31.1% 30.4% 33.9% 39.2% 43.6% 40.5% 37.8% 37.3%Asset turnover na na 0.79 0.81 0.88 0.89 0.83 0.89 0.92 0.92Sales / Capital invested na 1.73 1.09 1.15 1.20 1.13 1.04 1.12 1.19 1.26OCF / Capex nm 3.00 2.84 3.46 2.73 3.11 2.58 3.62 3.17 3.27Capex / Sales na 11.1% 9.7% 8.6% 8.5% 8.6% 8.5% 7.1% 7.1% 6.9%Capex / Depreciation PPE nm 1.79 1.94 2.30 2.24 2.19 1.61 1.44 1.36 1.37Dividend payout ratio na 43.8% 135.2% 46.8% 46.7% 47.1% 44.8% 43.6% 43.4% 42.6%

Equity / Total assets na 59.4% 52.2% 51.8% 52.1% 52.0% 56.2% 55.0% 54.2% 57.2%Net IB debt / Equity na -23.9% -22.8% -37.8% -30.0% -34.7% -28.0% -35.6% -38.0% -47.8%Net IB debt / EBITDA na -0.8 -0.5 -0.7 -0.6 -0.8 -0.7 -0.8 -0.8 -1.0EBITDA / Net interest na n.m. 1159.8 n.m. n.m. n.m. n.m. n.m. n.m. n.m.EBITA / Net interest na n.m. 970.8 n.m. n.m. n.m. n.m. n.m. n.m. n.m.

Balance sheet data 1997 1998 1999 2000 2001 2002 2003 2004e 2005e 2006e

Net IB debt na -2,627 -2,356 -3,608 -2,890 -3,890 -3,716 -4,754 -5,230 -7,966Net working capital (NWC) 0 4,392 5,012 4,461 6,541 7,438 8,982 8,338 8,891 9,746Capital employed (CE) na 12,120 11,459 10,387 10,585 12,070 13,712 14,072 14,519 17,462Capital invested (CI) 0 13,113 14,729 12,377 14,650 16,842 19,402 18,838 19,431 20,357Enterprise value YE (EV) na na 70,932 84,441 77,686 57,285 78,989 65,309 63,151 60,429



27 September 2004

40


Disclosures and disclaimers

The Carnegie Group Carnegie is an independent Nordic investment bank operating in Securities, Investment Banking and Asset

Management & Private Banking. Carnegie provides a wide array of financial products and services to Nordicand international clients from offices in seven countries: Sweden, Denmark, Norway, Finland, Luxembourg,the UK and the US. Carnegie Investment Banking is the leading independent corporate finance advisor in theNordic countries. Carnegie Asset Management and Private Banking provide financial services including assetmanagement for selected institutions and private investors. The Carnegie Group was listed on the StockholmBourse on 1 June 2001.

Ratings and risk assessment structure

Stock rating distribution for sector Health care

Rating No. of stocksOutperform 10Neutral 12Underperform 5Not Rated 0Under Bid 0Under Review 0

Total 27

Current rating system (as of 10 June 2003)StockratingsCarnegie stock ratings are relative to Carnegie’s coverage universe on a Nordic sector basis.OP=Outperform The stock is expected to outperform the return on the Carnegie coverage universe of the

Nordic Sector over the next 6 months.N=Neutral The stock is expected to perform in line with the return on the Carnegie coverage universe of

the Nordic Sector over the next 6 months.U=Underperform The stock is expected to underperform the return on the Carnegie coverage universe of the

Nordic Sector over the next 6 months.

Sector View

Positive The sector is expected to outperform the return on the total Nordic market over the next 6 months.

Neutral The sector is expected to perform in line with the return on the total Nordic market over the next 6 months.

Negative The sector is expected to underperform the return on the total Nordic market over the next 6 months.

Other ratingsNR=Not rated The investment rating, if any, has been suspended temporarily. UR=Under review The investment rating, if any, has been suspended temporarily. UB=Under bid The investment rating, if any, has been suspended temporarily.

Risk assessment

Low risk Estimated equity beta <0.75Medium risk Estimated equity beta 0.75 to 1.25High risk Estimated equity beta >1.25

Previous rating systemSB=Strong buy The stock is expected to provide a return of greater than 20% over the next 6 months.B=Buy The stock is expected to provide a return of between 10% and 20% over the next 6 months.Acc=Acumulate The stock is expected to provide a return of between 5% and 10% over the next 6 months.R=Reduce The stock is expected to provide a return of between 0% and 5% over the next 6 months.S=Sell The stock is expected to provide a return of less than 0% over the next 6 months.

Carnegie’s coverage universe on a Nordic sector basis is rated relative to the total Nordic market. Carnegie’s strategists, in co-operation with the sector heads, set the sector recommendations.

The risk assessment is based on the analyst’s evaluation of the company’s equity beta based on the business risk (asset beta) and financial risk (gearing).

Price and company rating history (AZN.ST) Old rating structure until 9 June 2003

Price rel. to sector and company rating history (AZN.ST) New rating structure from 10 June 2003

12/05A

23/04UR

04/11B

14/10SB

07/08A

26/07B

18/10A

03/08B

09/06A

5

10

15

20

25

30

35

40

45

50

55

Mar 00 Jun 00 Sep 00 Dec 00 Mar 01 Jun 01 Sep 01 Dec 01 Mar 02 Jun 02 Sep 02 Dec 02 Mar 03 Jun 03

13/09N

13/08O

10/06N

84

86

88

90

92

94

96

98

100

Mar 03 Jun 03 Sep 03 Dec 03 Mar 04 Jun 04 Sep 04

AstraZeneca AstraZeneca rel. to Carnegie sector Health Care Stockholm All Share (Se)

Source:Carnegie Research


27 September 2004


Analyst certification The research analyst or analysts responsible for the content of this report certify that, not withstanding the

existence of any such potential conflicts of interests referred to herein, the views expressed in this reportaccurately reflect our personal views about the companies and securities covered. We further certify that wehave not been, nor are or will be, receiving direct or indirect compensation related to the specificrecommendations or views contained in this report.

Potential conflict of interest As of 1 February 2003, Carnegie analysts and any connected persons are not ordinarily permitted to hold

securities in the companies they cover. As an integrated Nordic investment bank and asset management firm, Carnegie is a leading broker of Nordicstocks and has investment banking and other business relationships with a large number of the companiescovered by its research department. Carnegie is constantly soliciting investment banking assignments.Therefore, any reader of this research report should assume that Carnegie is seeking or will seek investmentbanking or other business from the company or companies to which it refers. Thus, investors should assumethat Carnegie expects to receive or intends to seek compensation from any company mentioned in thisreport within the next 3 months.

Disclaimer

Carnegie offers stockbroking, investment banking and asset management services through companies basedin the Nordic territories (Sweden, Denmark, Finland and Norway), Luxembourg and New York. Eachcompany is regulated by the appropriate authority in the relevant territory and details of each company areavailable on request. Carnegie UK is the UK Branch of Carnegie Investment Bank AB, a companyincorporated in Sweden with limited liability. Carnegie UK is regulated by the UK Financial Services Authorityfor the conduct of designated investment business in the UK. This report has been approved for thepurposes of Section 21 of the Financial Services and Markets Act 2000 by Carnegie UK and issued by it in theUK. This report is issued in the US by Carnegie, Inc., a US registered broker-dealer.

This report is provided for informational purposes only and under no circumstances is it to be used orconsidered as an offer to sell, or a solicitation of any offer to buy any securities. The information in thisreport was obtained from various sources while all reasonable care has been taken to ensure that theinformation is true and not misleading, Carnegie does not guarantee its accuracy or completeness. Carnegie,its associated companies and any of their officers or directors may have a position, or otherwise beinterested in, transactions in securities which are directly or indirectly the subject of this report. Carnegie, orits associated companies, may from time to time perform investment banking or other services for, or solicitinvestment banking or other business from, any company mentioned in this report.

This research report is prepared for general circulation and general information only. It does not have regardto the specific investment objectives, financial situation and the particular needs of any specific person whomay receive this report. Investors should seek financial advice regarding the appropriateness of investing inany securities or investment strategies discussed or recommended in this report and should understand thatstatements regarding future prospects may not be realized. Past performance is not necessarily a guide tofuture performance. Carnegie and its associated companies accept no liability whatsoever for any direct orconsequential loss arising from the use of this report or its contents. Investors in the US should be aware thatinvesting in non-US securities entails certain risks. The securities of non-US issuers may not be registeredwith, nor be subject to, the current informational reporting and audit standards of the US Securities andExchange Commission.

This report may not be reproduced, distributed or published by any recipient for any purpose. Copyright©2002 Carnegie.


27 September 2004

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27 September 2004


AstraZeneca Company Summary

Profit & loss 2002 2003 2004e 2005e 2006e

Sales 17,841 18,849 21,381 22,798 24,989

EBITDA 4,967 5,404 6,031 6,771 7,726

EBITA 4,262 4,415 4,986 5,585 6,462

EBIT 4,007 4,111 4,676 5,275 6,152

Pre-tax profit 4,037 4,202 4,767 5,376 6,291

Net profit 2,836 3,036 3,457 3,900 4,566

EO items -350 0 0 0 0

Balance sheet 2002 2003 2004e 2005e 2006e

Total assets 21,576 23,573 24,295 25,406 29,124

Shareholders' equity 11,172 13,178 13,276 13,667 16,540

Goodwill 2,807 2,884 2,537 2,189 1,838

Net IB debt -3,890 -3,716 -4,754 -5,230 -7,966

Cash flow 2002 2003 2004e 2005e 2006e

EBITDA 4,967 5,404 6,031 6,771 7,726

Operating cash flow 4,799 4,121 5,461 5,118 5,638

Net cash flow (NCF) 3,256 2,524 3,953 3,505 3,912

Decrease in net IB debt 100 544 631 35 2,260

Per share data 2002 2003 2004e 2005e 2006e

EPS 1.64 1.78 2.09 2.42 2.84

EPS adj. 1.99 1.95 2.28 2.61 3.03

EPS adj. Growth 4.0% -1.6% 16.8% 14.6% 15.8%

CEPS 2.19 2.53 2.92 3.35 3.81

DPS 0.77 0.80 0.91 1.05 1.21

BVPS ex. GW 4.83 6.0 6.5 7.1 9.1

NIBDPS -2.24 -2.17 -2.88 -3.25 -4.95

Ratios 2002 2003 2004e 2005e 2006e

P/E 25.9 23.9 20.2 17.5 15.0

P/E adj. 21.4 21.7 18.6 16.2 14.0

P/BVPS 6.6 5.5 5.3 5.0 4.1

P/BVPS ex. GW 8.8 7.0 6.5 5.9 4.6

P/CEPS 19.4 16.7 14.5 12.7 11.1

EV/Sales 3.8 3.7 3.2 3.0 2.6

EV/EBITDA 13.8 12.7 11.2 9.9 8.4

EV/EBITA 16.1 15.6 13.6 12.1 10.0

Dividend yield 1.8% 1.9% 2.2% 2.5% 2.9%

FCF yield 4.5% 3.5% 5.4% 4.8% 5.4%

Business areas Sales Breakdown By Geographical Areas

Salick Health Care1%

Pharmaceuticals99%

RoW10%

Japan5%

Europe32%

US53%

Source: Carnegie Research Source: Carnegie Research

Company description Company miscellaneous

CEO Tom McKillop 15 Stanhope Gate

CFO Jonathan Symonds + 44 171 304 5000

IR Mina Blair Robinson www.astrazeneca.com

Next report: 21 Oct 2004

Major shareholders

AstraZeneca was formed in April 1999 through the merger of Astra AB inSweden and Zeneca Group PLC in the UK. The company ranks third in theworld in ethical pharmaceuticals. It specialises in seven therapeutic areas.Globally, AZ ranks number one in Gastrointestinal, number two in Cancer andpain control, number four in Respiratory and number five in Cardiovascular. It isalso active in the CNS field. With a view to sustaining growth in the long term,AZ invests USD2bn annually in R&D.

Capital Votes Capital Votes

The Capital Group 15.7% 15.7% Legal & General Inv. 3.0% 3.0%

Investor 3.7% 3.7% Merrill Lynch 2.8% 2.8%

Putnam Investment 3.0% 3.0%

Carnegie Investment Bank AB Tel +46 8 676 88 00 Fax +46 8 676 88 95

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Carnegie Investment Bank AB, Finland Branch Tel +358 9 618 711 Fax +358 9 618 71 239

Carnegie Investment Bank AB, UK Branch Tel +44 20 7216 4000 Fax +44 20 7417 9426

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