Pharmaceutical giant AstraZeneca (AZN) has seen its share price fall 16% in opening trading as the company revealed disappointing initial results from the Mystic trial in stage four lung cancer.
The drug company stated that the trial of its drug Imfinzi failed to meet thresholds required to deem it a success. The failure is being seen as a huge setback for the trial, and for Astra, which had been banking on the success of the drug in order to take market share in the immune-oncology market.
Sean Bohen, Chief Medical Officer at AstraZeneca, said: "While the results from the MYSTIC trial for progression free survival in first-line Stage IV non-small cell lung cancer compared with standard of care are disappointing, the trial was designed to assess overall survival and we look forward to evaluating the remaining primary endpoints of overall survival for both mono- and combination therapy."
Damien Conovor, equity analyst for Morningstar said in December that Astra’s PD-L1 drug for lung cancer had the potential to be a “major blockbuster”.
“AstraZeneca faces the typical risks inherent in the pharmaceutical industry, including patent expirations, regulatory delays, and non-approvals, as well as increasingly aggressive generic and managed-care industries,” said Conover. “Also, specific to Astra, the company holds a relatively high exposure to generic competition over the next couple years. Further, while the company's pipeline has improved, if the company's top pipeline drug for lung cancer fails to take market share, the firm's cash flows would be significantly impacted.”
Astra announced half year results this morning showing an 11% fall in revenues to $10.5 billion in the first six months of the year, although core operating profit rose 7% to $3.2 billion and earnings per share rose significantly – up 58% to $0.80.
Pascal Soriot, Chief Executive Officer, said that first half performance was in line with expectations.
“I'm excited about our pipeline-driven transformation as we continue to deliver for shareholders on our strategy to return to sustainable long-term growth,” he said. “In a pivotal year for AstraZeneca, we remain focused on realising the potential of our pipeline, growing our new launch medicines and bringing our strong science to patients."
Edentree fund manager Ketan Patel shared that this setback will put pressure on Soriot, who promised much when he rebuffed a takeover bid from Pfizer in 2014.
"Shareholders have suffered a rollercoaster ride recently," said Patel. "With the share price falling on the back of rumours of the CEO abandoning ship to join a generics business. This pipeline failure will only add further pressure on the CEO."