Top Woodford stock AstraZeneca dives on drug blow

A City trader's approach to AZ shares? Not quite but they are quarantine

The medications were pitted against platinum-based standard-of-care, but after much speculation the British-based drugmaker said it had failed to improve PFS when compared to chemo in patients whose tumors express PD-L1 on 25% or more of their cancer cells.

In an update to the stock market, the company - which makes many widely used clinical drugs, including anaesthetics and diabetes treatments - said that initial results of the study, known as "Mystic", showed that the medicines did not "meet the primary endpoint" intended from the trial.

The trial will continue to assess overall survival of patients treated with Imfinzi alone and the Imfinzi-tremelimumab combination, AstraZeneca said. Those overall survival results are expected in 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.

Profit for the second quarter was US$477 million compared with a loss of US$3 million a year earlier as the company reined in costs. Sales came in at $4.9m, down 10 per cent on the same period past year, and earnings per share were 87 cents per share, slightly ahead of the 80 cents expected.

As a secondary endpoint, although not formally tested, durvalumab monotherapy also would not have met a pre-specified threshold of progression-free survival benefit, the company added. 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.

"[Although] the results from the MYSTIC trial for PFS in first-line stage IV NSCLC compared with standard of care are disappointing, the trial was created to assess overall survival", Sean Bohen, executive vice president of global medicines development and chief medical officer at AstraZeneca, said in the release.

Employment tribunal fees ruled unlawful
This had happened "notwithstanding" the existence of the remission scheme, which was in any event "of very restricted scope". For cases related to unpaid wages, redundancy pay or breach of contract, the claim fee was £160 and hearing fee was £230.

The company kept its interim dividend of 90.0 cents per share unchanged.

"We are skeptical of Mystic's ability to show an OS benefit for both mono and combo following the PFS fails, given that it will be further confounded by cross over", wrote Jefferies analyst Jeffrey Holford in a July 27 note calling the news a "significant blow".

Analysts reckon Tagrisso could have peak sales in excess of US$3bn a year.

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. As part of the agreement, Merck will pay AstraZeneca up to $8.5 billion in total consideration, including $1.6 billion upfront, $750 million for certain license options and up to $6.15 billion contingent on successful achievement of future regulatory and sales milestones.

"Despite the outcome of the initial readout, we must be patient as the Mystic trial continues as planned to evaluate overall survival, " chief executive Pascal Soriot said.

Shares lost 15.7% at the open to £43.11.

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