AstraZeneca stock slumped Monday after its Daiichi Sankyo-partnered drug missed its mark in a study of patients with breast cancer.
The companies tested their drug, an antibody drug conjugate, in patients with a metastatic form of breast cancer. Antibody drug conjugates, or ADCs, are like smart bombs for cancer. They send toxic chemicals directly to targets on cancer cells. This limits the damage to healthy tissue.
But the experimental drug didn't lead to a statistically significant improvement in overall survival vs. chemotherapy. The results surprised Wall Street. Earlier, AstraZeneca and Daiichi Sankyo's drug extended the amount of time patients lived before their cancer worsened. That often leads to a benefit on overall survival.
"We note that AstraZeneca/Daiichi Sankyo's press release did not hint at clinically meaningful overall survival benefits," RBC Capital Markets analyst Brian Abrahams said in a report to clients. "AstraZeneca attributed the overall survival miss to additional ADCs approved during the trial and used following progression/discontinuation."
AstraZeneca Stock Dips
AstraZeneca stock dipped 1.6% to 77.14. Shares of Gilead Sciences, which has a rival ADC approved for this form of breast cancer closed roughly flat at 83.99.
AstraZeneca is specifically focusing its drug, known by the shorthand Dato-DXd, on patients whose breast cancer tests positive for estrogen and progesterone receptors, but negative for the HER2 gene. Dato-DXd targets TROP2, a protein associated with this form of breast cancer.
Gilead's Trodelvy uses the same mechanism to target this disease.
AstraZeneca's miss on overall survival and lowered potential for approval "alleviates some competitive overhang for Trodelvy, a positive for Gilead," RBC's Abrahams said.
He has a sector perform rating on Gilead stock, but didn't list a rating for AstraZeneca stock.
On the other hand, AstraZeneca's setback could reinforce doctors' preference for another AstraZeneca drug, Enhertu. Enhertu is another ADC, but it targets the HER2 protein. Abrahams notes some doctors will even retest patients' HER2 levels. Even low levels could make them eligible for treatment for Enhertu.
"Given these dynamics, we currently assume about $400 million sales for Trodelvy in HR positive/HER2 negative setting growing to about $800 million over the years," he said. "Today's news reduces the risk that this would plateau earlier or compress."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
