AstraZeneca plc.’s AZN stock has risen 10.5% this year so far, outperforming the industry’s rally of 4.6%. AstraZeneca’s outperformance has been backed by quite a few positive developments on the regulatory and pipeline front.
Positive Pipeline Developments
AstraZeneca delivered well on its R&D pipeline with meaningful data readouts and regulatory updates announced this year. In clinical studies, strong results were achieved by Lynparza in first-line ovarian cancer while Imfinzi showed an overall-survival benefit for patients in earlier-stage lung cancer.
New drug approvals this year include Lokelma (formerly known as ZS-9) for the treatment of hyperkalemiain the United States and new asthma medicine, Fasenra (benralizumab)in Japan and EU. Fasenra was approved in the United States in November last year and is fast becoming a key contributor to sales.
Key approvals for line extensions of new cancer drugs this year include Imfinzi for an early stage lung cancer and Lynparza for breast cancer in the United States and Japan and Tagrisso in first-line EGFR-mutated NSCLC in both United States and EU. These label expansions can drive sales of these important cancer drugs higher in the future quarters. Please note that AstraZeneca markets Lynparza in partnership with Merck MRK.
Meanwhile a new formulation of AstraZeneca’s diabetes medicine, Bydureon in an improved once-weekly, single-dose pre-filled BCise device was also approved in the United States and EU this year.
Several launches are underway for AstraZeneca across each of the therapeutic areas — Oncology, CV metabolism and Respiratory. AstraZeneca expects to launch four respiratory medicines between 2017 and 2020 with Fasenra and Bavespi already launched. In oncology, AstraZeneca’s target is to launch at least six new oncology medicines between 2014 and 2020, with Lynparza, Tagrisso, Imfinzi and Calquence already launched. An interesting candidate in the company’s immuno-oncology pipeline is Imfinzi (durvalumab), which is being evaluated for multiple cancers, either alone or in combination with other regimens,
Meanwhile, several pipeline and regulatory events are scheduled for the rest of 2018 and 2019. This includes NDA filing for investigational triple combination therapy PT010 for COPD; FDA’s decision on leukemia candidate, moxetumomab pasudotox and data readout on anaemia candidate, roxadustat.
New Drugs Support Sales
AstraZeneca’s newer drugs like Brilinta (cardiovascular), Lynparza (ovarian cancer), Farxiga/Forxiga (type II diabetes) and Tagrisso (lung cancer) are doing well. Brilinta and Farxiga achieved blockbuster status in 2017, exceeding $1 billion in sales. Imfinzi and Fasenra, launched in 2017/early 2018, are off to a strong start, given their highly competitive clinical profile. AstraZeneca is looking for further label expansions of these drugs. New medicines generated more than $1 billion in additional sales in the first half of 2018 compared with the year-ago quarter.
AstraZeneca is looking to return to growth in 2018 on the back of newer drugs as patent expirations have been hurting its growth since 2010. AstraZeneca is hopeful that the effects of the patent expiration of key drug Crestor in Europe and Japan will recede materially in the second half of this year, which should boost sales and profits.
Conclusion
AstraZeneca, which carries a Zacks Rank #3 (Hold), faces its share of challenges. These include generic competition for its core products, stiff competition for the diabetes franchise and pricing pressure on sales of the respiratory franchise. However, we believe the company’s newer drugs, upcoming product launches, aggressive cost-cutting efforts and a promising late-stage pipeline should keep the stock afloat in the rest of year.
Some better-ranked large-cap drug stocks are Eli Lilly & Company LLY and Bristol-Myers Squibb Company BMY. While Bristol-Myers sports a Zacks Rank #1 (Strong Buy), Lilly has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bristol-Myers’ earnings estimates increased 5.5% for 2018 and 4.9% for 2019 over the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 6.39%.
Lilly’s earnings estimates increased 6.2% for 2018 and 4% for 2019 over the last 60 days. The company delivered a positive earnings surprise in each of the trailing four quarters, with an average beat of 10.15%. The company’s shares have increased 25.1% year to date.
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