AstraZeneca PLC (LSE:AZN) has scored another significant milestone in its cancer treatment programme, securing accelerated approval from the US Food and Drug Administration (FDA) for Datroway, a promising drug aimed at treating advanced lung cancer.
According to analysts at Shore Capital, this marks a notable step forward, even though the approval initially targets a smaller patient group than anticipated.
Datroway, developed in partnership with Daiichi Sankyo, is part of an emerging class of treatments known as antibody-drug conjugates (ADCs).
These targeted therapies deliver chemotherapy directly to cancer cells by binding specifically to proteins like TROP2, widely found on tumours, including lung and breast cancers.
Precision treatment
The advantage of ADCs is their precision; they aim to destroy cancer cells while limiting damage to healthy tissue, thereby reducing side effects common with traditional chemotherapy.
The latest approval specifically covers advanced non-small cell lung cancer (NSCLC) patients who have already undergone extensive treatment.
Datroway’s green light was based on robust clinical trial data, notably the Phase II TL05 and Phase III TL01 studies, following a resubmission to the FDA late last year.
This follows the drug's earlier approval in January for advanced breast cancer, reinforcing its growing role in AstraZeneca’s oncology arsenal.
Ambitious plan
Analysts at ShoreCap highlight that AstraZeneca’s broader strategy is ambitious: to make more than half of lung cancer patients eligible for its medicines by 2030.
Datroway is central to achieving this, especially as the company aims to move the drug into earlier treatment phases and pair it effectively with immunotherapy agents, notably anti-PD-(L)1 treatments.
The next crucial milestone will be results from the Phase III AVANZAR trial, expected later this year, evaluating Datroway as a first-line treatment for lung cancer.
ShoreCap views this as a pivotal moment, crucial for determining the drug’s full market potential, which they estimate could reach peak sales of approximately US$4 billion (risk-adjusted) to US$8 billion (non-risk-adjusted).
Long-term growth intact
Financially, ShoreCap remains optimistic about AZ's long-term growth.
Currently, the Anglo-Swedish giant's shares trade at around 13.6 times projected earnings for the financial year 2026, slightly above its peer group average but considerably below historical norms.
The broker believes AZ can achieve its ambitious growth targets, forecasting a fair valuation of 15,000p per share, translating to roughly 18 times projected earnings.
However, investors should be mindful of potential volatility linked to ongoing political uncertainties in the US, which could continue to impact the sector.
In short, AstraZeneca’s Datroway approval represents a strategic advancement in cancer treatment, underpinning the company's long-term growth prospects and solidifying its position at the forefront of oncology innovation.
The shares were up 26p at 10,446p in afternoon trading.