AstraZeneca chief is betting the company’s future on a single roll of the dice

The view from Endpoints

AstraZeneca CEO Pascal Soriot

Nearly five years into his stint at the helm of AstraZeneca, CEO Pascal Soriot has now reached his year of living dangerously.

This morning the pharma chief outlined a steadily declining rate of revenue. Core EPS is expected to slide in the low to mid teens as generics continue to chop away at their Crestor franchise. All their old blockbusters are being disenfranchised, in a manner of speaking.

Soriot, not known to waver in times of a crisis, wasn’t about to break down now. He announced: “It is an exciting time as we rapidly approach the inflection point for our anticipated return to long-term growth, built on the solid foundations of a science-led pipeline.”

Investors weren’t very excited by the numbers, though, sending the company’s shares down by close to 3% this morning.

After a whole slate of clinical setbacks in 2016, the financial erosion at AstraZeneca has focused an unwavering spotlight on the company’s combination study for the PD-L1 checkpoint durvalumab and tremelimumab, a CTLA-4, dubbed MYSTIC.

A latecomer to the checkpoint inhibition field, AstraZeneca is making a high-risk attempt at cutting into the line of heavyweights competing on lung cancer, looking for evidence that they have a combo that can rival the advancing fortunes of Merck’s Keytruda/chemo combination, now under review.

AstraZeneca recently tweaked MYSTIC, adding months to the timeline as the pharma company awaits progression-free survival data this year and overall survival data in 2018. And the move was widely viewed as signaling some underlying concerns about how the final data readout will look.

Delays of any kind, though, are poison to AstraZeneca, as faster companies continue to capitalize on the first wave of checkpoints and more companies muscle in alongside them. Pfizer, allied with Merck KGaA, also has a checkpoint now under review at the FDA. Merck, Bristol-Myers and Roche are already well into the market, with their own follow-up plans. And Bristol-Myers’ decision not to pursue an accelerated approval for Opdivo (PD-1)/Yervoy (CTLA-4) in lung cancer raised even more doubts about the approach at AstraZeneca.

The stakes for AstraZeneca keep getting higher, creating a remarkable high-wire act for a Big Pharma player.

Not only does AstraZeneca have to gain an approval now, the company also has to be recognized as a leader in the field, positioned to grab billions of dollars in new sales. Just falling short of expectations will be enough to quash hopes for the near-term turnaround that AstraZeneca needs.

“Rarely has a single trial result been so crucial to a company the size of AstraZeneca,” said Mick Cooper of Trinity Delta.

And how.

Revenue in 2016 hit $23 billion in 2016, down from $24.7 billion. But Soriot promised $45 billion in revenue by 2023, now just six years away. The company has already started backing away from that number, blaming currency valuations. But even their new goals will rapidly evaporate without a big score on the I/O front.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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