Shares in pharma giant AstraZeneca (LON:AZN) have dropped £14.40 or 10% today on negative drug trial news. The move has wiped around £30 billion off the company’s stock market valuation in one fell swoop.
Missing its endpoint
The company said its Wainua heart drug treatment had not met its primary efficacy endpoint in Phase III trials. Adding Wainua to existing treatments in patients with a particular cardiovascular condition ‘did not provide a statistically significant benefit’.
Sharon Barr, Astra’s executive vice president of biopharmaceutical R&D said: ‘Although the trial did not meet its primary objective, we believe the results support greater scientific understanding of treatment approaches for the hundreds of thousands of patients worldwide suffering from this progressive and often fatal condition.’
AstraZeneca and its partner, US pharma company Ionis (NASDAQ:IONS), will now analyse the full data set to understand the results. Shares in Ionis were indicated sharply lower ahead of the opening of the US market.
We aren’t pharma specialists but clearly the market had high hopes for Wainua as a treatment. Up to 500,000 people worldwide suffer from transthyretin-mediated amyloid cardiomyopathy, which the drug was designed to treat.
Analysts at US broker Jefferies were surprised at the outcome, particularly as Astra management had been very confident about the trials. Jefferies estimates the NPV (net present value) of Wainua sales at 2% of the company market cap, but said ‘given the company is supposed to design clinical trials that are virtually fail-safe, we suspect the share price reaction will go beyond the mere NPV impact’.
Analysts at AlphaValue called the trial result a ‘major setback’ while noting Wainua is already approved to treat a rare nerve disease. Astra management are believed to have targeted $5 billion in peak annual sales for the drug, making it a ‘blockbuster’.
Read the press release here: https://www.astrazeneca.com/investor-relations.html
