Financial Times - AstraZeneca CEO warns of ‘substantial setback’ if new drug fails
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June 11, 2017. Sarah Neville, David Crow.
Results from eagerly awaited Mystic immunotherapy trial expected within weeks.
AstraZeneca will face a “substantial setback” if its most ambitious foray into cutting edge immunotherapy falls flat, its chief executive Pascal Soriot has acknowledged.
The eagerly awaited study into a new lung cancer drug is expected to produce its first results within weeks.
Investors are set to scrutinise the data closely, as success could propel the Anglo-Swedish drugmaker to the forefront of a field that has revolutionised cancer therapyin recent years by mobilising the body’s own defences to fight tumours.
Analysts have estimated potential annual sales at around $2.5bn and investors have sent shares in the company up sharply this year.
But Mr Soriot appeared to play down expectations that the initial tranche of data from the trial — named Mystic — would provide definitive evidence of success. He admitted the company, which saw off a bid by US rival Pfizer three years ago, was still “exposed” to a takeover.
The results will show whether the drug is better than chemotherapy at stopping cancer from getting worse — a measure known as progression-free survival, or PFS — but not whether it makes sufferers live longer. Overall survival data are not due until next year.
“It’s likely to be the case . . . that you have to wait to see the overall survival benefit develop,” he told the Financial Times in an interview. “So if we are lucky we may have a PFS benefit for the combo this year, but if we don’t have a PFS benefit, it doesn’t mean it doesn’t work. It means we have to wait until next year.”
He continued: “If Mystic doesn’t work in combination, we still have the monotherapy. We have other products. So it would be a substantial setback to our strategy in oncology, of course, but it would not be the end of the world for the company.”
Mr Soriot, whose stewardship has centred on strengthening AstraZeneca’s research and development programme, said he did not believe the potential of the company’s wider pipeline of drugs had yet been fully reflected in its share price.
When he led the defence of AstraZeneca against Pfizer, he persuaded investors to reject an offer of £55 a share, and pledged to achieve revenues of $45bn by 2023.
AstraZeneca’s share price is close to that level, standing at just over £53 last week, but Mr Soriot said if the trial did not show benefit, it could “drop a little bit for sure”.
Acknowledging that the company could face another takeover bid, he said: “To some extent you’re always vulnerable. In fact, you could argue that if you succeed you are almost more vulnerable because you’re . . . more expensive but you’re a better asset.”
Unless AstraZeneca’s shares responded “massively to Mystic . . . I think we’re still exposed”, he added.
However, arguing that the same applied to all companies, he said: “We’ve lived with this . . . and we think we can continue creating value on our own.”
Mr Soriot said the uncertain climate in the US under the Trump administration, particularly over tax reform, meant it was hard accurately to assess the value of companies, chilling the outlook for M&A activity.
“If you acquire a company, and buy with a premium, and suddenly the environment changes in the US, you may end up having overpaid,” he said. “So that uncertainty in the US is also keeping people waiting and thinking.”
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