Recently, AstraZeneca (AZN) inked an oncology deal with US based privately-held non-profit medical research organization, Sage Bionetworks. The deal, whose financial terms were not disclosed, aims at a better understanding of the dreaded disease of cancer, which should lead to new therapies hitting the market. AstraZeneca and Sage Bionetworks intend to make use of advanced computational models of disease genetics to formulate a better understanding of cancer.
The partnership intends to utilize Sage Bionetworks’ proficiency in computer models of disease genetics coupled with AstraZeneca’s expertise in the field of oncology to fulfill its objective. We believe that the signing of the pact is a huge positive as cancer is one of the most dreaded diseases across the globe whose incidence is on the rise. According to data released by the World Health Organization, cancer will be responsible for 9.2 million casualties in 2015.
The wide prevalence of the disease further emphasizes the need for new therapies and better treatment options for patients suffering from this dreaded disease.
Our Take
We currently have a ‘Neutral’ recommendation on AstraZeneca, which is supported by a Zacks #3 Rank (‘Hold’). We believe the cost-cutting program will aid earnings in the near term, but will not be enough to compensate for continued revenue deterioration with several major drugs going off-patent.
We note that the company saw a revenue decline in the final quarter of 2010 owing to generic erosion. In order to avoid further declines in the top line, AstraZeneca needs to deliver on its pipeline. The company’s lead pipeline candidate is Brilinta (ticagrelor) for acute coronary syndrome. The US Food and Drug Administration (FDA) has set a target date of July 20, 2011 for deciding on the fate of the candidate following AstraZeneca’s response to the complete response letter (CRL) issued by the agency in December 2010.
While issuing the CRL, the FDA asked AstraZeneca to conduct additional analyses of data from PLATO trial. The PLATO trial was conducted to determine whether Brilinta was more effective in improving cardiovascular outcomes in ACS patients compared to Bristol-Myers Squibb Co. (BMY)/Sanofi-Aventis’ (SNY)) Plavix. We believe that the approval of Brilinta for ACS would be a major boost for AstraZeneca as several major products are either already facing generic competition or will face generic risk in the near future.
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