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AstraZeneca lung cancer failure sparks 16 percent share fall

28 July 2017

Initial results from MYSTIC found the combination of durvalumab and tremelimumab was no more effective at stopping disease progression than chemotherapy in patients expressing a protein called PD-L1 on 25 percent or more of their cancer cells.

The combination of durvalumab and tremelimumab failed to extend PFS compared with first-line chemotherapy among treatment-naive individuals with metastatic non-small cell lung cancer, according to phase 3 study results.

That means the trial has already missed one of its primary endpoints, and while AZ said it is continuing the trial to test Imfinzi and the combination's ability to improve overall survival, the company's shares were in freefall this morning - down nearly 16% at the time of writing as the company presented its interim results.

Final OS readouts from both endpoints are expected during the first half of next year.

Given that the focus around AstraZeneca is on its pipeline, the first half results played second fiddle this morning.

Despite income from several disposals and external deals, revenues slipped 9% (at constant exchange rates) to US$10.46bn.

Cambridge, England-based AstraZeneca posted net profit of $477 million, compared with a $3 million net loss a year earlier, when the company took a restructuring charge related to job cuts. Core earnings per share are anticipated to record a low to mid-teens percentage decline.

As anticipation of MYSTIC study's outcome steadily grew this summer, AstraZeneca worked to temper expectations and caution that a miss on PFS would not spell complete failure for Imfinzi in first-line lung cancer. Roger Franklin and Graham Doyle of Liberum Capital Ltd. said that while the price would likely fall on the news, the share could still find support on bid-speculation.

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As for dividend, that remained unchanged at US$0.90 (68.9p) a share as Astra repeated its full-year guidance.

Although not formally tested, durvalumab monotherapy would not have met a prespecified threshold of PFS benefit compared with chemotherapy in this patient population, according to an AstraZeneca-issued press release.

Analysts at Jefferies said in a note this morning: "We have modeled $5.1 billion peak sales around Mystic, but heavily risk-adjusted: We now model around $3.3 billion in peak sales for durvalumab in metastatic NSCLC and around $1.8 billion for tremelimumab, which is primarily predicated on the outcome of Mystic".

AstraZeneca separately announced it has entered a "global strategic oncology collaboration" with Merck & Co Inc, to co-develop and co-commercialise AstraZeneca's Lynparza drug, a treatment for multiple cancer types.

In the US, AstraZeneca said product sales were down 28% to USD3.01 billion from the year before, while sales in Europe also declined by 8.0% to USD2.72 billion.

"We must be patient as the Mystic trial continues as planned to evaluate overall survival".

Shares lost 15.7% at the open to £43.11.

AstraZeneca lung cancer failure sparks 16 percent share fall