The annual conference of the American Society of Clinical Oncology is always the biggest event-making cancer conference. And this year was no different.
What caught my attention was a company I’ve discussed before - AstraZeneca (AZN). The company’s lung (Tagrisso) and breast cancer (Enhertu) drugs significantly slowed the spread of disease in two trials, potentially establishing the medicines as the new standard of care for a large number of patients.
The positive data — which received a standing ovation at the conference — puts the company on course to ramp up sales of Tagrisso and Enhertu even further. Tagrisso is already AstraZeneca’s top-selling cancer drug, while Enhertu’s sales are climbing quickly.
Fabulous Trial Results
The company showed off potentially game-changing data for lung cancer patients. Keep in mind that lung cancer is the leading cause of cancer death, and is often diagnosed when it is already in advanced stages.
A clinical study of its cancer treatment Tagrisso, as a maintenance therapy, in a certain type of stage III non-small cell lung cancer (the most common type of the disease) found that it reduced the risk of disease progression or death by 84%, compared to a placebo.
Patients taking Tagrisso saw their disease progress after a median of 39.1 months, compared to 5.6 months for those who didn’t take the drug. The study also showed a trend toward overall longer survival, but more data is needed.
The trial results should establish Tagrisso as the new standard of care for patients with this specific type of cancer at this stage of disease. In other words, it is practice-changing data.
The second trial result concerns AstraZeneca’s breast cancer drug, Enhertu. The company has partnered with the Japanese pharmaceutical company, Daiichi Sankyo (DSNKY), on the development of this antibody-drug conjugate.
There is a class of molecules known as antibody-drug conjugates (ADCs). Think of ADCs as guided missiles that attack cancer. They use antibodies to deliver chemicals directly to tumors.
While ADCs have been around for decades, they’ve recently improved so much that now there is much talk about how ADCs will replace conventional chemotherapy.
Enhertu - the basis of a $6.9 billion deal in 2019 between the two firms - was already transforming the treatment of breast cancer. One in eight women will get breast cancer in their lifetime, and Enhertu has the potential to be a game changer for half of them.
Enhertu was first approved in the U.S. in 2019 for patients with cancer that have high levels of a protein called HER2. About 15% to 20% of breast cancers are HER2-positive.
The data for Enhertu showed that patients with breast cancer who had previously undergone hormone therapy and took Enhertu lived for a median of 13.2 months without the disease progressing. That compares to just 8.1 months for patients who received chemotherapy.
The data showed an “unprecedented” improvement in progression-free survival, supporting the thesis that ADCs can deliver their payloads more specifically to cancer cells.
The patients in this trial had hormone-positive breast cancer with a small number of HER2 receptors. The finding means that patients with this type of cancer at this stage might not have to move straight to chemotherapy.
Enhertu is also approved in other types of cancer as well, including gastric and non-small cell lung cancer.
More to Come
AstraZeneca also signed a $6 billion deal in 2020 with Daiichi Sankyo on another ADC. It is known as Dato-DXd.
AZN considered the full data from an earlier trial “clinically meaningful,” especially in a large segment that makes up about 70% of the patients - those with non-squamous lung cancer. And the ADC treatment was found to have better tolerability than standard chemotherapy in that patient population.
The company is smart to invest in this sector. ADCs have very exciting potential to replace conventional chemotherapy across a wide range of different tumor types.
The estimates of the long-term market potential for ADCs is similar to obesity drugs. Morgan Stanley (MS) forecasts the ADC market could eventually be worth more than $140 billion!
That bullish estimate is based on a one-for-one switch from conventional chemotherapy, which accounts for more than 37% of U.S. cancer prescriptions. Eventually, ADCs will become widely adopted, because it is better for cancer patients than current chemotherapies.
And the company is also pushing into radiopharmaceuticals, which promise even more precision. Earlier this year, it agreed to buy Fusion Pharmaceuticals for as much as $2.4 billion.
Ambitious Sales Target for AZN
AstraZeneca CEO Pascal Soriot has set a very ambitious target - to almost double its sales to $80 billion by 2030.
The company, which generated $45.8 billion in revenue last year, will launch 20 new medicines by the end of the decade to meet the new total revenue target. That’s an increase from previous estimates of only 15 given by the company.
Many of the new drugs will come from the segment we’ve talked about - its oncology division - that already contributes 40% of sales. In the latest quarter, the company’s revenues from oncology rose 26%.
Back in 2014, Soriot was only two years into the job, and had a lot to prove after aggressively fighting a takeover attempt from Pfizer (PFE). He assuaged investor concerns at that time by pledging to raise annual revenue to more than $45 billion by 2023.
He met that target after Soriot overhauled its R&D and focused on its oncology unit, which includes blockbuster cancer drugs like the aforementiond Tagrisso, as well as Imfinzi.
His efforts have been widely credited with reviving AstraZeneca’s fortunes, with the share price increasing by more than 300% since he took charge in 2012, giving it a stock market valuation of about $250.6 billion.
I would not bet against Soriot. AZN stock is a buy below $85 a share.
