As­traZeneca inks $8.4B pact with Mer­ck as cru­cial MYS­TIC study fails and shares plunge

As­traZeneca’s cru­cial com­bi­na­tion tri­al of dur­val­um­ab (Imfinzi) and treme­li­mum­ab has failed the pri­ma­ry end­point on pro­gres­sion-free sur­vival as a first-line ther­a­py for non-small cell lung can­cer. The shock waves from that news im­me­di­ate­ly ripped through its share price, eras­ing bil­lions in mar­ket val­ue and spurring some fevered spec­u­la­tion about the phar­ma gi­ant’s fu­ture. And with­in hours an­a­lysts start­ed to raise the prospect that the fall­out just might be bad enough to in­spire a new megamerg­er takeover at­tempt.

The news marks a ma­jor set­back for As­traZeneca $AZN. An­a­lysts have been wait­ing months for the re­sults, see­ing it as a crit­i­cal test of CEO Pas­cal So­ri­ot’s plan to turn things around at the phar­ma gi­ant af­ter five years at the helm. A suc­cess here could have vault­ed As­traZeneca in­to the front ranks of a fu­ri­ous as­sault on a multi­bil­lion-dol­lar mar­ket; fail­ure was deemed a dis­as­ter. The com­bo study of the PD-L1 and CT­LA-4 check­point drugs is con­sid­ered the most im­por­tant tri­al that the phar­ma gi­ant has been pur­su­ing, and its biggest stock cat­a­lyst of the year.

Sean Bo­hen, As­traZeneca

As­traZeneca’s shares cratered on the news, plung­ing 15% and wip­ing out more than $12 bil­lion in mar­ket cap. Mer­ck shares $MRK, mean­while, surged 4% in pre-mar­ket trad­ing as the prospect of a di­rect threat to its lead po­si­tion on lung can­cer re­ced­ed. And once again Bris­tol-My­ers Squibb was dam­aged, drop­ping 6% as in­vestors con­sid­ered the con­se­quences of fail­ure for a PD-(L)1 and CT­LA-4 sim­i­lar to its own matchup for Op­di­vo and Yer­voy in the CM-227 tri­al.

As­traZeneca sought to take the sting out of the tri­al fail­ure by si­mul­ta­ne­ous­ly an­nounc­ing a ma­jor new de­vel­op­ment and com­mer­cial­iza­tion part­ner­ship with Mer­ck for its promis­ing PARP Lyn­parza along with the ex­per­i­men­tal MEK drug selume­tinib.

Mer­ck $MRK agreed to pay a whop­ping $2.35 bil­lion in an up­front and op­tion fee to co-de­vel­op and mar­ket the two drugs, work­ing on monother­a­py stud­ies as well as com­bi­na­tions along­side their ri­val PD-(L)1 drugs Imfinzi and Keytru­da. Mer­ck will al­so pay up to $6.15 bil­lion in mile­stones, mak­ing this an $8.4 bil­lion deal — one of the largest of its kind.

But it wasn’t enough to soft­en the blow.

As­traZeneca first ac­knowl­edged the fail­ure of MYS­TIC in a down­load ear­ly Thurs­day of new clin­i­cal tri­al re­sults, then con­firmed it in a re­lease. There was more bad news.

“As a sec­ondary end­point, al­though not for­mal­ly test­ed,” the com­pa­ny adds, “Imfinzi monother­a­py would not have met a pre-spec­i­fied thresh­old of PFS ben­e­fit over SoC in this dis­ease set­ting.”

“We now have to wait for over­all sur­vival da­ta in the first half of 2018,” said So­ri­ot in a call with re­porters, adding that he was dis­ap­point­ed by the ini­tial re­sults. “This is the main end­point,” he added about OS, look­ing to keep hope alive.

As­traZeneca was 5th to mar­ket with a PD-(L)1 drug. Mer­ck and Bris­tol-My­ers Squibb were able to seize the lead in the megablock­buster can­cer mar­ket, so As­traZeneca re­cal­i­brat­ed its de­vel­op­ment plans to em­pha­size its com­bi­na­tion strat­e­gy.

So­ri­ot has re­peat­ed­ly flashed signs of the stress that has been build­ing over MYS­TIC. It’s ex­tra­or­di­nary for any Big Phar­ma to be in a po­si­tion like this, where one tri­al can play such a cru­cial role in de­ter­min­ing a com­pa­ny’s fate.

This morn­ing, though, So­ri­ot and R&D chief Sean Bo­hen de­fend­ed their de­sign of the MYS­TIC study, putting PFS in for the first take.

“If it had been suc­cess­ful every­one would have been thrilled,” Bo­hen said about MYS­TIC PFS da­ta. So­ri­ot al­so bat­ted back con­cerns about the po­ten­tial neg­a­tive im­pact of crossovers on the OS end­point, which sev­er­al an­a­lysts have raised as a po­ten­tial hur­dle on sur­vival rates.

“Peo­ple are com­ment­ing on the dan­ger of crossover,” the CEO told re­porters. “We have lim­it­ed crossover. The risk there is much low­er than in oth­er stud­ies.”

We may nev­er know, though, what role the da­ta played in the strange sto­ry about Te­va’s re­port­ed move to of­fer the CEO’s job to So­ri­ot. Over sev­er­al days As­traZeneca’s stock shed bil­lions in mar­ket cap as ru­mors float­ed about his pos­si­ble de­par­ture from As­traZeneca. So­ri­ot dis­pelled those ru­mors with an in­ter­nal memo un­der­scor­ing his in­ten­tion to stay and fight it out. Back when Pfiz­er was look­ing to buy the com­pa­ny, he pledged As­traZeneca will al­most dou­ble last year’s $23 bil­lion in rev­enue by 2023.

That goal, how­ev­er, looks like it’s re­ced­ing — at least to­day. In H1 As­traZeneca’s to­tal rev­enue de­clined 11% com­pared to the same pe­ri­od in 2016 as fran­chise rev­enue con­tin­ued to erode in the face of gener­ic com­pe­ti­tion. The com­pa­ny ex­pects a sin­gle-dig­it de­cline for the year in what has been pre­sent­ed as the bot­tom point for the num­bers.

So­ri­ot re­peat­ed­ly re­fused to di­rect­ly ad­dress the Te­va sto­ry to­day, but he pub­licly re­it­er­at­ed his in­ten­tion to stay fo­cused on his goals at the phar­ma gi­ant.

“I’m com­mit­ted to de­liv­er­ing on our strat­e­gy to re­turn­ing to growth,” he said. Not every­thing has worked out, he not­ed, but So­ri­ot in­sist­ed that the com­pa­ny had made “enor­mous progress.”

Pressed on Te­va, he added:

“I’m not a quit­ter. That is as far as I will go.”

Asked by Reuters’ Ben Hirschler about a share price that fell to £43 this morn­ing, com­pared to the £55 that Pfiz­er of­fered, the CEO said: “Over­all the pipeline is de­liv­er­ing…You have to give these things time,” says So­ri­ot. “There’s a lot more in our pipeline than MYS­TIC.”

As the dust set­tled lat­er in the day, new pre­dic­tions be­gan to cir­cu­late that the weak­ened share price could at­tract a new bid for the com­pa­ny. And As­traZeneca is in a much worse po­si­tion now to fight off an ac­qui­si­tion.


Im­age: Pas­cal So­ri­ot AP Im­ages

Health­care Dis­par­i­ties and Sick­le Cell Dis­ease

In the complicated U.S. healthcare system, navigating a serious illness such as cancer or heart disease can be remarkably challenging for patients and caregivers. When that illness is classified as a rare disease, those challenges can become even more acute. And when that rare disease occurs in a population that experiences health disparities, such as people with sickle cell disease (SCD) who are primarily Black and Latino, challenges can become almost insurmountable.

Jacob Van Naarden (Eli Lilly)

Ex­clu­sives: Eli Lil­ly out to crash the megablock­buster PD-(L)1 par­ty with 'dis­rup­tive' pric­ing; re­veals can­cer biotech buy­out

It’s taken 7 years, but Eli Lilly is promising to finally start hammering the small and affluent PD-(L)1 club with a “disruptive” pricing strategy for their checkpoint therapy allied with China’s Innovent.

Lilly in-licensed global rights to sintilimab a year ago, building on the China alliance they have with Innovent. That cost the pharma giant $200 million in cash upfront, which they plan to capitalize on now with a long-awaited plan to bust up the high-price market in lung cancer and other cancers that have created a market worth tens of billions of dollars.

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

David Meek, new Mirati CEO (Marlene Awaad/Bloomberg via Getty Images)

Fresh off Fer­Gene's melt­down, David Meek takes over at Mi­rati with lead KRAS drug rac­ing to an ap­proval

In the insular world of biotech, a spectacular failure can sometimes stay on any executive’s record for a long time. But for David Meek, the man at the helm of FerGene’s recent implosion, two questionable exits made way for what could be an excellent rebound.

Meek, most recently FerGene’s CEO and a past head at Ipsen, has become CEO at Mirati Therapeutics, taking the reins from founding CEO Charles Baum, who will step over into the role of president and head of R&D, according to a release.

FDA hands ac­cel­er­at­ed nod to Seagen, Gen­mab's so­lo ADC in cer­vi­cal can­cer, but com­bo stud­ies look even more promis­ing

Biopharma’s resident antibody-drug conjugate expert Seagen has scored a clutch of oncology approvals in recent years, finding gold in what are known as “third-gen” ADCs. Now, another of their partnered conjugates is ready for prime time.

The FDA on Monday handed an accelerated approval to Seagen and Genmab’s Tivdak (tisotumab vedotin-tftv, or “TV”) in second-line patients with recurrent or metastatic cervical cancer who previously progressed after chemotherapy rather than PD-(L)1 systemic therapy, the companies said in a release.

Volker Wagner (L) and Jeff Legos

As Bay­er, No­var­tis stack up their ra­dio­phar­ma­ceu­ti­cal da­ta at #ES­MO21, a key de­bate takes shape

Ten years ago, a small Norwegian biotech by the name of Algeta showed up at ESMO — then the European Multidisciplinary Cancer Conference 2011 — and declared that its Bayer-partnered targeted radionuclide therapy, radium-223 chloride, boosted the overall survival of castration-resistant prostate cancer patients with symptomatic bone metastases.

In a Phase III study dubbed ALSYMPCA, patients who were treated with radium-223 chloride lived a median of 14 months compared to 11.2 months. The FDA would stamp an approval on it based on those data two years later, after Bayer snapped up Algeta and christened the drug Xofigo.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 117,700+ biopharma pros reading Endpoints daily — and it's free.

Mi­rati tri­umphs again in KRAS-mu­tat­ed lung can­cer with a close­ly watched FDA fil­ing now in the cards

After a busy weekend at #ESMO21, which included a big readout for its KRAS drug adagrasib in colon cancer, Mirati Therapeutics is ready to keep the pressure on competitor Amgen with lung cancer data that will undergird an upcoming filing.

In topline results from a Phase II cohort of its KRYSTAL-1 study, adagrasib posted a response rate of 43% in second-line-or-later patients with metastatic non-small cell lung cancer containing a KRAS-G12C mutation, Mirati said Monday.

As­traZeneca, Dai­ichi Sanky­o's ADC En­her­tu blows away Roche's Kad­cy­la in sec­ond-line ad­vanced breast can­cer

AstraZeneca and Japanese drugmaker Daiichi Sankyo think they’ve struck gold with their next-gen ADC drug Enhertu, which has shown some striking data in late-stage breast cancer trials and early solid tumor tests. Getting into earlier patients is now the goal, starting with Enhertu’s complete walkover of a Roche drug in second-line breast cancer revealed Saturday.

Enhertu cut the risk of disease progression or death by a whopping 72% (p=<0.0001) compared with Roche’s ADC Kadcyla in second-line unresectable and/or metastatic HER2-positive breast cancer patients who had previously undergone treatment with a Herceptin-chemo combo, according to interim data from the Phase III DESTINY-Breast03 head-to-head study presented at this weekend’s #ESMO21.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 117,700+ biopharma pros reading Endpoints daily — and it's free.

Ex­elix­is pulls a sur­prise win in thy­roid can­cer just days ahead of fi­nal Cabome­tyx read­out

Exelixis added a thyroid cancer indication to its super-seller Cabometyx’s label on Friday — months before the FDA was expected to make a decision, and days before the company was set to unveil the final data at #ESMO21.

At a median follow-up of 10.1 months, differentiated thyroid cancer patients treated with Cabometyx (cabozantinib) lived a median of 11 months without their disease worsening, compared to just 1.9 months for patients given a placebo, Exelixis said on Monday.

Dave Lennon, former president of Novartis Gene Therapies

Zol­gens­ma patent spat brews be­tween No­var­tis and Re­genxbio as top No­var­tis gene ther­a­py ex­ec de­parts

Regenxbio, a small licensor of gene therapy viral vectors spun out from the University of Pennsylvania, is now finding itself in the middle of some major league patent fights.

In addition to a patent suit with Sarepta Therapeutics from last September, Novartis, is now trying to push its smaller partner out of the way. The Swiss biopharma licensed Regenxbio’s AAV9 vector for its $2.1 million spinal muscular atrophy therapy Zolgensma.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 117,700+ biopharma pros reading Endpoints daily — and it's free.