Shares in AstraZenca PLC (LON:AZN) edged higher in early deals on Monday after US regulators granted its Tagrisso drug for patients with advanced metastatic non-small cell lung cancer ‘breakthrough therapy designation’ .
The move from the US Food and Drug Administration effectively fast-tracks the regulatory review of the medicine – also known as osimertinib – as a first line treatment for standard of care in advanced epidermal growth factor receptor mutation-positive NSCLC.
Tagrisso had already received FDA approval but unlike the US National Comprehensive Cancer Network Clinical Practice Guidelines in Oncology which were updated to include the use of Tagrisso in the 1st-line treatment of patients, the FDA still has the drug as a second-line treatment.
A first-line treatment is seen as the initial go-to drug, whereas a second-line treatment is only looked at if the first doesn’t work.
The BTD status follows Astra’s phase III trial, which recently reported an increase in the median progression-free survival for previously untreated patients to 18.9 months compared to just 10.1 months for current standard of care treatments.
"The Breakthrough Therapy Designation acknowledges not only Tagrisso's potential as a 1st-line standard of care in advanced EGFR mutation-positive NSCLC, but also the significant need for improved clinical outcomes in this disease,” said chief medical officer Sean Bohen.
“The results of the FLAURA trial have the potential to redefine clinical expectations and offer new hope for patients who currently have a poor prognosis."
Positive news but ‘unlikely to move the needle’
“A compendia listing for an approved drug generally means that most insurers will provide reimbursement, even before these indications are formally added to the drug labels by the FDA,” wrote UBS’ Jack Scannell.
“This means we may see sales accelerating in 4Q17 from off-label usage. Label changes have, however, been widely expected for these two trials.
“The guideline update should therefore be positive for sentiment and allow uptake ahead of expectation, but it is unlikely to increase use in the long run.”
Scannell adds that consensus forecasts are for US$3.1bn of Tagrisso sales in 2022 out of total revenues of US$29.3bn.
Price target upgrade from HSBC, but broker still bearish
Analysts at HSBC upped their target price for Astra to £41.50 (from £41) this morning, although they’re still bearish on the stock, reiterating their ‘reduce’ rating.
“We view AZN’s pivot towards oncology as high risk, given both the highly concentrated portfolio and several clinical failures of key pipeline assets,” said analyst Julie Mead.
“We maintain our Reduce rating based the high degree of risk around revenues which are heavily reliant on delivery by a concentrated R&D pipeline.”
Astra shares added 0.15% in early deals to £51.59.
--Updates for analyst comment--