Astra Falters, Gives Way to Merck, Roche in Lung-Cancer Race

  • Shares of Astra routed in London, wiping out $14 billion
  • Cancer immuno-therapies still a new market for drugmakers

AstraZeneca Plc’s failed lung-cancer trial has upended the race to develop the most promising new treatments in a generation, giving two of the U.K. company’s biggest rivals an edge in the multi billion-dollar market for the drugs.

A combination of two next-generation Astra drugs, each unproven as the first line of treatment for lung cancers, failed to significantly check the growth of lung tumors in the trial dubbed Mystic, the Cambridge, England-based drugmaker said on Thursday. Bristol-Myers Squibb Co., which embraced a similar approach, has already stumbled. Merck & Co. and Roche Holding AG meanwhile are testing drug regimens that include chemotherapy. 

The four drugmakers are jockeying for leadership in the burgeoning field of immune-therapies, or drugs that harness the immune system to fight tumors. Each already has a drug on the market. The failed Astra trial was a shot on goal for one of the $25 billion field’s biggest prizes: more than 120,000 patients with lung tumors, one of the most deadly forms of cancer.

“What we don’t know about cancer immuno-therapy is much bigger than what we do know,” Dan O’Day, chief of Roche’s pharmaceutical unit, said in an interview in Basel on Thursday. “It’s just starting to unfold.”

Shares of Astra plummeted almost 17 percent, wiping out 10.8 billion pounds ($14.2 billion) in market value. The stock traded down to 42.92 pounds as of 3:17 p.m. in London trading. The stock had soared to a record last month in anticipation of the trial results, briefly climbing past the 55 pounds a share that Pfizer offered three years ago.

Both Merck and Roche succeeded in mid-stage trials with their combinations of an immune-therapy and chemo, which despite its toxic side effects, has long been the standard of care for the disease.

Bristol-Myers, which had been testing its immune-oncology therapies Opdivo and Yervoy together, in January said it wouldn’t pursue an accelerated approval process in the U.S. for the combination in a sign that the trial results could be underwhelming. A year ago, Opdivo had failed in a key lung cancer trial in an even bigger blow to the company. Such missteps have helped erase more than a quarter of the company’s market value in the last 12 months and made Bristol-Myers the target of takeover speculation.

‘Nothing Preordained’

“I would expect that Bristol would also be under pressure” following the Mystic results, said Birgit Kulhoff, a health-care fund manager with Rahn & Bodmer Co. in Zurich. “On the other hand, it’s very positive for Merck and of course Roche.”

Others disagree.

“Nothing is preordained in IO,” Jeffrey Holford, an analyst at Jefferies LLC, said in a note to clients, using shorthand for immune-oncology. He argued that the Mystic results can’t be used to foretell the outcome for Bristol’s ongoing trials. Still, shares of Bristol fell as much as 7 percent in New York.

The CheckMate-227 trial underway at Bristol, whose results are due in the first quarter, uses “different designs, drugs, dosing and scheduling,” a spokeswoman for the New York-based drugmaker said in an emailed response to questions. “It’s difficult to make direct comparisons or draw conclusions from one trial to another.”

Merck’s Lead

Merck gained a major edge over its rivals in May when it won U.S. Food and Drug Administration approval to sell a combination of its blockbuster Keytruda and chemo as the first line of treatment for patients with newly diagnosed lung tumors. More conclusive data from a bigger study is due later this year.

Mystic’s failure leaves Merck with this segment of the lung cancer market to itself for at least the next year, Bloomberg Intelligence analyst Sam Fazeli wrote in a note. Analysts expect approvals for Keytruda in treating a variety of tumors in more patients to fuel almost $7.5 billion in sales by 2020.

Roche’s first late-stage test of the concept, a trial that combines Tecentriq with chemotherapy and the older Avastin treatment, is expected to produce results by end 2017. But the company will already have lost the lead to Merck, which may be harder to displace, according to Alex Arfaei, an analyst at BMO Capital Markets.

That’s still only a small slice of the coming trials in the space, however, cautioned O’Day. Five late-stage Roche trials of drug combinations that include chemo -- with and without Avastin -- for different types of lung cancer will have results within the next 12 months, O’Day said. Three more trials in renal, breast and colon cancer will read out over the same period.

‘Different Hypothesis’

“It’s important to note that Mystic was asking a very different question than we’re asking in our trials for lung cancer,” O’Day said. “It’s a very different hypothesis and, I would argue, higher risk.”

Both O’Day and Astra’s top executives cautioned that success or failure in the measure of whether the tumors shrink -- which researchers call progression-free survival -- doesn’t always correlate with longer life for patients. The jury is still out on whether Mystic succeeds on the second measure.

“This is a very volatile field, and we are learning,” Astra CEO Pascal Soriot told reporters on a call. Data on his drugs’ ability to improve life expectancy, which are due out in the first half of next year, are more important than the efficacy in curbing the growth of tumors, he said, and several studies in the past have demonstrated a significant improvement in overall survival rates, despite failing to show progression-free survival benefit.

“This is something that has become clearer over the past year or so: it takes time for immuno-oncology products to have an effect,” Soriot argued.

Some immune-oncology trials with early failures have gone on to prove they can significantly extend life expectancy, according to Umer Raffat, an analyst at Evercore ISI in New York. Examples he cited are Roche’s Tecentriq in a lung cancer trial dubbed as Oak, and Bristol-Myers’s Opdivo in another trial for advanced lung cancer.

“The immune oncology space continues to throw up plenty of curveballs,” according to Emmanuel Papadakis and Israel Akinrinsola, analysts with Barclays Plc.

— With assistance by Cynthia Koons

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