AstraZeneca may be suffering a whirlwind of negative COVID-19 vaccine headlines now, but better days are ahead, thanks in part to a “prolific pipeline" and a strong oncology franchise.
That's the word from Jefferies analyts, who totted up reasons for their fair-weather forecast in a Tuesday investor note. AstraZeneca is on an “impressive revenue and profit trajectory” that’s “compelling” compared with other large European pharma companies, the analysts wrote.
While AstraZeneca is just setting out with its COVID-19 vaccine rollout—and obviously suffering the growing pains of a newcomer to the vaccine field—the company has spent years developing its oncology franchise. Those meds are set to deliver megabillions to AZ's top line, the analysts predict. Tagrisso alone is expected to peak at more than $10 billion in EGFR-positive lung cancer, including a potential $3 billion to $4 billion in adjuvant non-small cell lung cancer.
The analysts see another $5.5 billion for PARP inhibitor Lynparza on the heels of a recent trial win in a subset of breast cancer patients. Immuno-oncology agent Imfinzi, for its part, is “likely entrenched” in stage III lung cancer, the analysts say, with applications in other tumors.
Meanwhile, AstraZeneca in December agreed to buy rare disease drugmaker Alexion for $39 billion. The deal is expected to close in the third quarter, and around that time, the analysts predict the market better appreciate the deal's "strategic merit." The purchase will give AstraZeneca an entrée into rare diseases, plus chances to grow sales in different countries and to fund more R&D programs, they wrote.
Aside from marketed meds and the Alexion buy, a “multitude of pipeline catalysts” could boost AZ in the years to come, Jefferies analysts wrote. Those include other oncology candidates, plus roxadustat in anemia from chronic kidney disease, anifrolumab in lupus and tezepelumab in asthma.
Plus, the company is the “best positioned” among European pharma companies to benefit from China’s healthcare reforms, the analysts figure. AZ already has 15 medicines on the country’s essential drugs list.
On the COVID-19 vaccine front, AstraZeneca’s rollout has run into numerous problems, including supply shortfalls and regulators halting vaccinations over blood-clotting concerns. While those issues are commanding headlines, the analysts don’t see COVID-19 vaccine revenues as a long-term fixture for the company.
They project $1 billion in COVID-19 vaccine sales this year, falling to a “negligible contribution” in 2024 and beyond.
Plus, in a bad-news-can-be-good-news assessment, the analysts figure investors may soon have a buying opportunity when forthcoming COVID-19 vaccine data are released.
Because of the company’s phase 3 trial protocol in the U.S., weak data could force the stock lower, giving investors a chance to pick up AZ shares on the cheap, the analysts wrote. The U.S. study is using a “sub-optimal” 4-week dosing schedule, while "it has already been shown that the vaccine works better with a longer dosing interval," the Jefferies analysts wrote.