Still 80% Chance of Approval for Astra’s Brilinta

We have high conviction in the drug's eventual approval in the US but since the FDA delayed issuing a decision, we are revising our sales estimates for 2011/2012

Damien Conover, CFA 20 December, 2010 | 9:32AM
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The Food and Drug Administration issued a complete response letter for AstraZeneca's (AZN) most important near-term pipeline drug, Brilinta, which was under review for treating cardiovascular disease. Since the complete response letter didn't request additional clinical trials, we believe the drug's US approval will only be delayed until 2012. We don't expect any major changes to our fair value estimate based on the US delay for Brilinta, and we continue to estimate an 80% chance of approval for the drug in the United States.

Our high conviction regarding the drug is supported by a favourable FDA advisory committee vote (7 to 1 in favour of approval) and the drug's strong efficacy (16% reduction in deaths and strokes compared with market leader Plavix). Further, the recent European approval gives us additional confidence in the eventual approval of the drug in the US. Because of the delay, however, we plan to reduce our 2011 and 2012 Brilinta sales estimates by $50 million (less than 1% of total sales) and $90 million (less than 1% of total sales), respectively, which has a modest impact on our earnings estimates. From a strategic standpoint, the US approval delay will probably lower the trajectory of Brilinta's eventual launch as tough competition from low-cost generic Plavix is likely to enter the market in mid-2012 following Plavix's patent expiration.

Very few details were given on the FDA's complete response letter. We believe the FDA needs more data on the US patient population in the pivotal Phase III study, Plato. In the study, the US patient subgroup showed minimal clinical benefit. While US patient group represented less than 8% of the total patients in the trial, the FDA is clearly most concerned about these patients. We believe the concomitant use of high-dose aspirin (largely a US-only trend) caused the poor US results. Since Astra is seeking an indication for Brilinta with low-dose aspirin, we believe the drug will eventually reach the US market.

Damien Conover, CFA is an equity analyst with Morningstar.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
AstraZeneca PLC10,008.00 GBX0.39Rating

About Author

Damien Conover, CFA  is an equity analyst and associate director at Morningstar.

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