AstraZeneca plc (LON:AZN) saw billions wiped off its value yesterday after the Mystic lung cancer trial suffered a serious setback but major shareholder Neil Woodford thinks the market reaction was unwarranted.
Shares in the drugmaker fell 16% after saying that the Phase II trial of Mystic failed to meet the primary end point of improving progression-free survival compared to chemotherapy.
Star fund manager Woodford, however, said the share price fall was not a reflection of the failure of the drug or AstraZeneca’s strategy. He added that the market had not put sufficient value on the company's cancer drugs, including Tagrisso and Lynparza.
"The investment case for AstraZeneca is about so much more than this one trial. Across a broad spread of disease areas, the company is developing new ground-breaking therapies which have significant commercial potential," he wrote in a blog posted on the company's website late Thursday.
Liberum also remained positive on the stock, repeating a ‘buy’ rating but putting its target price under review.
AstraZeneca chief executive Pascal Sorio held an analyst meeting this morning, outlining reasons why Mystic could be positive on improving overall survival rates.
“Whilst we certainly don't think positive overall survival is a prudent base case, the current share price dismisses the entire opportunity,” Liberum said.
“We and others have always pointed out the risk that Mystic could read out positive overall survival data but fail at progression-free survival.”
The broker added that the company seems confident ahead of the full data presentations on studies for lung cancer drugs Tagrisso and Imfinzi, expected in September.
Shares in AstraZeneca recovered today, rising 3.36% to 4,453.50p in afternoon trading.