(Bloomberg) -- AstraZeneca Plc plunged by a record after suffering a setback to its next-generation cancer therapy, hurting Chief Executive Officer Pascal Soriot's ambition to join the league of the world's five largest drugmakers.
Imfinzi, used in combination with tremelimumab, failed to do better than chemotherapy in checking the growth of lung tumors in the study dubbed Mystic for patients whose tumors expressed the PD-L1 biomarker on 25 percent or more of their cancer cells, the U.K. drugmaker said in a statement on Thursday. The drugs were poised to generate more than $7 billion in sales by 2022, according to analysts' estimates compiled by Bloomberg.
The failure calls into question Soriot's ability to deliver on his growth strategy, put in place to keep the company independent when he rebuffed Pfizer Inc.'s $117 billion-takeover bid three years ago, and may make the firm vulnerable again. Imfinzi, which was poised to become Astra's biggest medicine by sales, is the cornerstone of its cancer portfolio and key for meeting Soriot's goal, set in 2014, of boosting revenue to $45 billion by 2023.
“Despite the outcome of the initial readout, we must be patient as the Mystic trial continues as planned to evaluate overall survival,” Soriot said in the statement. The study will continue to assess whether Imfinzi or the combination of drugs can help improve life expectancy, with the results expected in the first half of next year.
Stock Plummets
Shares of Astra plummeted almost 17 percent, the most ever, and traded at 42.98 pounds as of 8:58 a.m. in London trading. The stock had soared to a record last month in anticipation of the trial results, briefly climbing past the 55 pounds-a-share that Pfizer offered three years ago.
“This is obviously very bad news,” with the only hope now pegged to the overall survival results that are pending, said Rudi Van den Eynde, an Astra shareholder who manages the pharmaceutical and biotech strategies at Candriam Investors Group in Belgium. “They are now more vulnerable, but the bride is a bit less desirable also.''
The Mystic study was a crucial test for Astra's two immuno-therapies -- a new class of drugs that activate the body's defense system to attack tumors -- in its race with rivals including Merck & Co., Roche Holding AG and Bristol-Myers Squibb Co. to dominate the market for cancer treatments.
Deadly lung tumors have become a key battleground for drugmakers in the closely contested race to develop life-saving cancer therapies. Last year, after Bristol-Myers unexpectedly lost its lead following the failure of a key study, Astra amended the design of its three-year study to improve Imfinzi's odds. For Bristol-Myers, the failure of its Opdivo immuno-therapy in a clinical trial for lung cancer was in large part responsible for a quarter of its market value being wiped out from a year ago, and led to speculation about a potential sale of the company.
‘A Reversal'
The Mystic result “shows how volatile” the market for these treatments are, Roche's Chief Executive Officer Severin Schwan told reporters in Basel on Thursday.
“One can see how quickly things develop,” Schwan said. “If you remember, it wasn't too long ago that people were saying BMS would rule the immune therapy market with its drug. There's been a reversal here.”
The disappointing results extend a tumultuous few weeks for Astra as speculation about Soriot's future mounted following a media report that he'd accepted the top position at Teva Pharmaceutical Industries Ltd.
In a July 16 staff memo, the CEO urged employees to remain focused on the U.K. drugmaker's goals and ignore rumors, though he refrained from directly addressing the Israeli publication's article on his plans. Both companies have also officially declined to comment on the veracity of the report; an Astra spokeswoman would only say that Soriot would be speaking to investors and analysts as he normally does when Astra reports quarterly results.
Tough Goal
Meanwhile, Astra has already suffered one setback on its way to meeting its long-term revenue target, with heart pill Brilinta -- forecast by the company to generate $3.5 billion in sales by 2023 -- failing in two key studies last year.
The drugmaker on Wednesday separately posted an unexpected increase in second-quarter profit. Core earnings per share, a measure that excludes some costs, rose to 87 cents, the Cambridge, England-based drugmaker said Thursday in a statement. That beat the 80 cent-average estimate of analysts surveyed by Bloomberg. Sales fell 10 percent to $5.05 billion, and compared with the $5 billion estimate of analysts.
Astra and Merck also reached an agreement to develop and commercialize Lynparza for different types of cancer. Merck will pay the U.K. company as much as $8.5 billion. That includes $1.6 billion in an upfront payment, plus $750 million for license options and up to $6.15 billion if the drug achieves regulatory and sales milestones.
At the same time, Astra said its lung-cancer drug Tagrisso met the main goal of checking the growth of tumors in a late-stage study dubbed Flaura, giving it the potential to become the first line of treatment. The company said it will start talks with global health authorities on the data ahead of seeking regulatory approval.
To contact the reporters on this story: James Paton in London at jpaton4@bloomberg.net, Naomi Kresge in Berlin at nkresge@bloomberg.net.
To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
