AstraZeneca PLC (LSE:AZN) was among the few failing to benefit from the post-Jubilee bounce that sent stocks higher despite unveiling promising results at the weekend for its Enhertu breast cancer treatment.
The pharma giant reportedly received a standing ovation when it announced the results of its DESTINY-Breast04 clinical trials on metastatic breast cancer treatment at the seminal ASCO cancer conference on Sunday, but even so its shares were down 3.58% at 10,068p per share on the Monday after the long weekend.
To put this into context, the shares have surged 21% over the past six months and most analysts had already priced the anticipated success of the breast cancer drug into their expectations.
At the ASCO cancer conference, coinciding with the British Queen’s jubilee celebrations, the pharma group gave a critical update on its breast cancer drug Enhertu, based on the third phase of the DESTINY-Breast04 clinical trials on metastatic breast cancer treatment.
The data presented on Sunday showed a 50% reduced risk of progression or fatality when compared to chemotherapy treatments.
If the trials are successful, the breast cancer drug could be used to treat half of all breast cancers, AstraZeneca predicts.
Deutsche Bank said the results from the breast cancer trials “did not disappoint”, rating AstraZeneca stock a ‘Buy’.
However, analyst Emmanuel Papadakis said the data was already “in line with raised expectations” and that the company’s future share price will be predicated on whether it can transition the drug to a commercial launch and what other assets are in its pipeline.
“For the overall study population, the data lived up to, though didn’t exceed, our already very high expectations,” Papadakis said.
The investment bank's research arm set a target of 11,500p on the pharma group's share price, adding that it had already modelled the HER2-low breast cancer treatment into its evaluations as a 75% success probability.
JP Morgan analyst James Gordon said the results should “change the standard of care” for HER2-low metastatic breast cancer, anticipating an outperformance of Astrazeneca shares this morning.
Shore Capital Markets said AstraZeneca is trading at a “premium” to its European large-cap pharma peers for the year to date and also predicted its shares would “likely appreciate post ASCO".
Its analysts said: “Phase III DESTINY-Breast06 data are expected in FY23F that could further support its use in HER2-low breast cancer.”
Two years on from the height of the Covid-19 pandemic, pharma companies are now experimenting with a move away from vaccines.
In AstraZeneca's home market of the UK, the prime minister declared in February that the virus was no longer a live risk and set out a countrywide plan for "living with Covid".
AstraZeneca is now doubling down on cancer therapy drugs, as well as offering treatments for chronic and rare diseases, having bought Alexion Pharmaceuticals (NASDAQ:ALXN) last July, while it continues to sell its Covid-19 vaccine through its Covax facility.
In 2021, it reported net cash flow of USD$5.96bn, up from $4.8bn the prior year, but its earnings per share fell to USD$0.08, down from USD$2.44 a year earlier.
The group’s Enhertu cancer drug is already approved for use in cancer patients in the late stages of metastatic breast cancer, where the disease is associated with high levels of the human epidermal growth factor receptor 2.
AstraZeneca discussed potentially “further expanding” Enhertu use to earlier treatment lines for breast cancer as well as “new tumour types”.
While the results of the latest trials were promising, the market is now looking beyond that at the performance of the pharma group’s other products and businesses, said Deutsche Bank.