Oct. 26 (Bloomberg) -- AstraZeneca Plc, a U.K. drugmaker that's had setbacks with three new medicines this year, said third-quarter profit jumped 30 percent on increased sales of Seroquel for schizophrenia and the ulcer treatment Nexium.

Net income rose to $1.59 billion, or $1.01 a share, from $1.22 billion, or 76 cents, a year earlier, AstraZeneca said in a statement today. The London-based company's results beat analyst expectations. AstraZeneca said full-year earnings are expected to be $3.85 to $3.95 per share, the third time the company has raised the forecast.

AstraZeneca increased profitability by cutting costs and protecting older products from generic competition. Today, it dropped development of the stroke treatment NXY-059, after pulling the blood thinner Exanta in February and stopping work on the Galida diabetes medicine in May. The company is finding new uses of Nexium and Seroquel to help growth.

``AstraZeneca has been a great performer because margins have ramped,'' Andrew Fellows, an analyst at Helvea, said in an interview Oct. 24. ``The question is how sustainable is this?''

Shares of AstraZeneca fell as much as 240 pence, or 6.8 percent, to 3,289 pence, the biggest drop since December 2004, and were down 6.4 percent at 3,305 pence at 11:36 a.m. in London. The stock has gained about 17 percent this year.

AstraZeneca was expected to earn $1.49 billion, the median estimate of 13 analysts polled by Bloomberg. Revenue climbed 13 percent to $6.52 billion.

Nexium Use

The company is studying the use of Nexium as way to make painkillers easier on the stomach, and expanded the approval of Seroquel to treat the manic highs and lows of bipolar disorder. A once-daily form of the anti-psychotic, which would have patent exclusivity until 2017, is awaiting approval.

NXY-059, formerly known as Cerovive, is one of the company's two most-advanced treatments. The product showed no benefit over placebo in the treatment of acute stroke caused by a blood clot, the drugmaker said.

The drug was in the last stage of testing generally needed for regulatory approval and AstraZeneca had planned to submit it to regulators in the first half of next year. David Seemungal, an analyst at Standard & Poor's in London, had forecast peak sales of as much as $2 billion.

More Data

AstraZeneca is scheduled to release data on its second late stage product, AGI-1067 for narrowed arteries, in the first half of next year.

``If earnings momentum starts to falter, the really big reason to be in the stock starts to evaporate,'' Gbola Amusa, analyst at Sanford Bernstein in London, said in an interview today.

John Patterson, head of drug development at AstraZeneca, said NXY-059 had ``played a relatively small part in our plans going forward as we always knew it was high risk.'' It is unlikely that the company will now look to acquire any products in the stroke area, he said.

In June, Chief Executive Officer David Brennan vowed to take ``every action necessary'' to add late-stage experimental products, following the failure of Galida and Exanta. Earlier this month, he invited more than 60 venture capitalists to pitch possible purchases at a one-day event in London.

Investment Pace

``What is evident, since the change of CEO from Tom McKillop to David Brennan, is that the pace of investment'' into treatments developed by biotechnology companies and smaller drugmakers has stepped up markedly, Evolution Securities analyst Peter Cartwright said in an e-mailed note. The total spent this year on acquisitions and buying rights may be close to $2 billion, Cartwright said.

AstraZeneca, the U.K.'s second-largest drugmaker, in July said it anticipated earnings in the upper half of its $3.60 to $3.90 a share forecast.

The company is benefiting from a lack of competition from cheaper versions of its Toprol-XL hypertension drug, which analysts at Credit Suisse forecast would have sales of $483 million in the quarter.

Doctors are writing more prescriptions for Crestor as safety concerns wane amid positive data showing that it cut so-called bad cholesterol by 70 percent when taken in combination with Schering-Plough Corp.'s Zetia. The company is also working on a combination cholesterol pill using Crestor with Abbott Laboratories' TriCor or another late stage compound.

Sales of Crestor are expected to more than double in the quarter to $498.2 million, as the effect of comments made by FDA whistle-blower David Graham dissipate amid continuing positive data.

``Crestor script growth looks pretty impressive'' Max Herrmann, analyst at ING Financial Markets' in London, said in an interview before the release of results. ``It looks like they've had a very strong quarter.''

Nexium's Sales

Nexium's sales weren't expected to have been hurt by UnitedHealth Group Inc.'s decision to stop paying for it, analysts including Seemungal at S&P said. AstraZeneca didn't alter its sales forecasts for the pill after the largest U.S. health insurer made the decision last month.

Brennan said he planned to grow sales of top drugs like Seroquel, by expanding its use into generalized anxiety and bipolar disorder, and by introducing a once-a-day version of the pill.

Data on experimental medicine AGI-1067, for atherosclerosis reversal, from the so-called ARISE trial is scheduled to be released in the first quarter of next year.

``Pipeline expectations are quite modest,'' Helvea's Fellows said. ``To replace Nexium and Crestor you need to have big products. Going forward, they may have to put up with a more diversified product portfolio.''

AstraZeneca said the U.S. Securities and Exchange Commission is seeking information about payments made to doctors and government officials in some countries outside the U.S. The company didn't provide more details in the statement.

To contact the reporter on this story: Etain Lavelle in London at at elavelle1@bloomberg.net.

Last Updated: October 26, 2006 06:37 EDT