AstraZeneca's shares have fallen 10% year-to-date after the unexpected failure of nerve drug Wainua in a late-stage heart disease trial erased about $20 billion in market value. Investors are now focused on two upcoming oncology trial readouts that could determine whether the company's R&D engine remains intact.
AstraZeneca shares are down 10% this year after a late-stage trial failure, testing CEO Pascal Soriot's record of R&D success.
"Fundamentally, do I like AstraZeneca's R&D strategy, engine, company? Yes I do. Do I feel confident that investing in the stock right now is a good idea? No, I don't," Rajesh Kumar, an analyst at HSBC who downgraded the stock from buy to hold, said.
The setback came from Wainua, an approved treatment for rare neurological disorder ATTR-CM, which failed a Phase III trial testing the medicine in a form of heart disease. The failure erased about $20 billion of AstraZeneca's market value. The company's shares have more than quadrupled during Soriot's 14-year tenure, outperforming the FTSE 100 and rival GSK.
Attention now turns to two closely watched oncology trials — breast cancer study SERENA-4 and lung cancer trial AVANZAR — both due to report this year. "If both fail, Astra will have missed three out of three important readouts this year," Markus Manns, a portfolio manager at Union Investment, said.
The Wainua failure has sharpened scrutiny on AstraZeneca's pipeline, which the company has positioned to deliver $80 billion in annual revenue by 2030, up from about $59 billion last year. A Citeline report in January showed AstraZeneca leading the top 10 global drugmakers in new drug development programs and late-stage trial assets.
Not all analysts see the setback as a broader problem. Jefferies analyst Michael Leuchten called the share price decline a "significant overreaction," noting the company has about 200 late-stage pipeline assets. TD Cowen's Michael Nedelcovych also cautioned against drawing broad conclusions from a single trial failure.
"Sometimes you just don't get the answer you were looking for. That's part of the R&D game," Leuchten said. "I think they can stomach that kick in the shin, even if it hurts."
The outcome of the AVANZAR trial carries particular weight because it would validate the company's proprietary biomarker for selecting patients, with implications for several future oncology studies, HSBC's Kumar said.
AstraZeneca is scheduled to report second-quarter earnings on Monday. Analysts and investors said they will focus less on the financial numbers and more on what executives say about the outlook for SERENA-4 and AVANZAR.
The decline puts AstraZeneca's stock at its lowest relative level in two years, trailing both GSK and the FTSE 100. The company's next major catalyst is the Q2 earnings call on July 28, where management is expected to provide updates on both oncology trials.
This article is for informational purposes only and does not constitute investment advice.
