Broader use of cancer drugs sets AstraZeneca on path to post-2025 sales growth

AstraZeneca PLC's positive trial results for a hard-to-treat breast cancer and the expanded use of established oncology therapies will lessen the impact of expiring patents on a clutch of its best-selling medicines.

The late-stage Destiny study showed that AstraZeneca's Enhertu drug significantly slowed cancer growth and increased survival rates compared with chemotherapy in patients whose breast cancer has a low level of the HER2 protein and has spread in the body. The findings could reshape how breast cancer is classified and treated, AstraZeneca's executive vice president of oncology R&D, Susan Galbraith, said in a Feb. 21 announcement.

Enhertu is on track to become a very meaningful drug for AstraZeneca, UBS analyst Michael Leuchten said. In common with many of its Big Pharma peers, the Cambridge, U.K.-based drugmaker is facing the loss of exclusivity on some of its most successful cancer drugs and needs new sources of revenue. Ovarian cancer blockbuster Lynparza is likely to face cheaper, generic competition from 2027, while other oncology best-sellers like Imfinzi, Tagrisso, Calquence and Enhertu are safe until beyond 2030, AstraZeneca head of oncology Dave Fredrickson said.

"This is good news from a loss-of-earnings standpoint — we obviously work hard to defend that," Fredrickson told Market Intelligence. "But it's really about what sits in the pipeline behind it."

If approved, sales from this new use in breast cancer should significantly contribute to sales of Enhertu, said SG Cowen analysts in a Feb. 22 note. They forecast $8 billion sales in 2027, of which AstraZeneca will reap about $4 billion. Co-developed with Japan's Daiichi Sankyo Co. Ltd., the antibody-drug conjugate is also being investigated for use across multiple HER2-targetable cancers, including breast, gastric, lung and colorectal.

"In essence [the trial] sets the stage for AstraZeneca's growth beyond 2025 when some of the larger existing franchises are starting to lose patent expiry," said Leuchten, who rates the stock a "buy."

AstraZeneca is investing heavily in research to offset the coming revenue losses. A $9.7 billion investment in research and development in 2021, as well as the $39 billion acquisition of Alexion in 2020 and the creation of a new vaccines business, are designed to replenish its pipeline.

Tagrisso's potential

Fredrickson singled out lung cancer pill Tagrisso, which achieved 2021 sales of $5 billion only five years after launch, as having notable growth potential as an adjuvant, which would be given as an additional treatment to lower the risk of cancer returning. AstraZeneca is optimistic the pill could be approved for this indication in Japan toward the end of the year, after having received the green light in the U.S. and Europe.

"That adjuvant is certainly a blockbuster-plus opportunity," Fredrickson said. "We've got a runway that sits in front of us … so there's still life cycle plans on Tagrisso and its loss of exclusivity isn't until 2032, so that's also attractive."

Still, Fredrickson said cancer diagnosis across the world — which started to recover in the third quarter of 2021 before the omicron variant emerged — remains 5% to 15% below pre-pandemic levels. Lung cancer has been worst affected, with a lesser impact seen among some of the other tumor types.

"We should see a return at some point in the future, back to pre-COVID baseline levels," the executive said.

"What I don't think we are going to see — which at one point we hoped we might — would be higher than pre-COVID baseline levels, " Fredrickson said. "We may have lost some of those patients to COVID, to be quite honest."