With AstraZeneca’s big I-O combo reveal looming, investors get defensive

AstraZeneca is testing Imfinzi in combination with candidate tremelimumab, a CTLA4 therapy, as a first-line treatment for lung cancer.

Eagerly awaited results from AstraZeneca’s phase 3 Mystic trial, a first-line immunotherapy combo study in lung cancer, should arrive any time now—and investors are getting prepared. 

Investors have taken up defensive positions in the options market, Reuters reports; for AstraZeneca’s U.S.-listed shares, contracts expiring this week and next tally more than three open put options for each call option. Translation: More investors are reserving the right to sell at a set price at a later datein case shares sink on top-line data.

Of course, there’s no guarantee results will hit within that timeframe; AZ, for its part, has said only that it expects the data midyear. Traders, however, expect shares to move about 8% in either direction by the third week in July, according to the news service.

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But while the Mystic study's unveiling may move the needle on the stock exchange, it may deliver more questions than answers for industry watchers. The test of AZ's newly approved PD-L1 immunotherapy Imfinzi in tandem with CTLA4 drug tremelimumab won’t be presented in full until a medical meeting later this year. Overall survival data, the gold standard of cancer drug tests, may not come until next year.

With that in mind, the market might be expecting "more clarity, more quickly” than the Mystic trial “will reasonably deliver,” UBS analysts wrote earlier this week in a note seen by Reuters.

With its duo, AstraZeneca is vying for prime positioning in the all-important first-line lung cancer space. Right now, that field is controlled by Merck & Co., which has already snagged approvals for its PD-1 star Keytruda as a monotherapy and in tandem with chemo. Roche, which markets PD-L1 Tecentriq, is trialing a chemo combo of its own.

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AstraZeneca and Bristol-Myers Squibb, meanwhile, have gone the CTLA4 combo route, and AZ will be first to get the chance to show whether it has merit as a therapy for previously untreated patients. Results will have big implications for both companies—which are rumored Pfizer takeover targets that could face ramped-up buyout speculation if they fail—and for the immuno-oncology market as a whole. 

AZ recently scored a trial win that could boost the drugmaker even if Mystic results don’t go its way, though. In May, Imfinzi became the first to show a PD-1/PD-L1 contender could reduce lung cancer progression in earlier-stage patients, an outcome Bernstein analyst Tim Anderson called “a special surprise” that " ... goes some way toward securing" the company's "I-O bogey."