Drug setback wipes £10bn off Astrazeneca
Chief executive vows he is ‘not a quitter’ as dip in drug giant’s shares makes it ‘vulnerable’ to a takeover
ASTRAZENECA suffered its worst oneday share price crash since its formation in 1993, after bad results from a landmark lung cancer drug trial wiped more than £10bn from its market value.
Yesterday’s plunge in value intensified speculation about the future of Pascal Soriot, its chief executive – who declined to explicitly deny reports he is leaving to run Israeli rival Teva – and the company’s vulnerability to takeovers three years after it rebuffed a £70bn offer by American giant Pfizer.
Mystic – a trial of Astrazeneca’s immuno-oncology (IO) drug Imfinizi – failed to improve progression-free survival in patients compared to using chemotherapy, the firm said. The trial was Astrazeneca’s big play for a bite of the fast-growing IO drugs market, worth $8bn (£6.1bn) today and projected to reach $50bn in value. Shares in Astrazeneca closed down 15pc at £43.25, well below the £55-a-share offer made by Pfizer three years ago. The FTSE 100 company’s market valuation fell to £54.2bn, down from £64.7bn.
Mr Soriot refused to be drawn on his own future when questioned by journalists, saying he was “here today” and “very committed to delivering our strategy”. He added: “I’m not a quitter – that’s as far as I will go.”
He called for “patience” from investors for more comprehensive overall survival results from Mystic next year.
Mick Cooper, analyst at Trinity Delta, said a takeover tilt was now more likely: “Astrazeneca is undoubtedly more vulnerable. It will not be able to use the same defences it used in warding off Pfizer.”
Three top 20 shareholders rallied to the management’s defence. One, who declined to be named, cautioned any bid would “be very difficult politically”, adding: “You’ve got a major R&D and manufacturing business in the UK and Government is not going to want to see that go abroad.”
Another, Neil Woodford, star fund manager, said: “Very little of what I believe the company will achieve is reflected in today’s share price and even more so after today’s fall.”
Threadneedle Asset Management, part of another top 20 shareholder, Ameriprise, said: “This data read in no way invalidates the strong oncology pipeline Astrazeneca has built since the Pfizer approach.”
Theresa May has indicated that companies like Astrazeneca should not be taken out by foreign rivals due to their strategic value to the UK economy.
The firm said Imfinzi still had the potential to be a blockbuster earner, pointing out it won approval for use in bladder cancer patients in the US, and is being used in 12 ongoing clinical trials. Astrazeneca also announced an $8.5bn deal with American drugs firm Merck to find commercial pathways for its separate cancer drug Lynparza.
In its half-year results Astrazeneca posted a 11pc drop in sales to $10.5bn and a 37pc increase in operating profit to $1.8bn.