Following AstraZeneca’s I/O Trial Misstep, Analysts Examine This Novel Market

Merck and Bristol are set to reveal results from their own Immuno-Oncology trials


Following the failure of AstraZeneca (NYSE:AZN) for its immuno-oncology lung cancer treatment clinical trial, analysts at Braclays indicate what’s tech in the I/O space is now at the top.

On the morning of Thursday, July 27, AstraZeneca saw its stock take a sharp nearly 15 percent decline following the announcement that the company’s combo candidate of Imfinzi and CTLA-4 inhibitor tremelimumab missed its targeted endpoint compared to chemotherapy in the MYSTIC trial.

During after hours trading AZN was priced at $28.88, the last time it went under that was in February 8 when it closed the day at 28.62. On a year-to-date basis, AZN has increased it’s value by 5.71 percent.

Now analysts at Barclays pushed a report on the two companies with similar tech who have the option to own the I/O space now, Bristol (NYSE:BMY) and Merck (NYSE:MRK).

Analysts weigh in on the upcoming I/O trials

“Positive interim results from the PD-L1 expresser arm in CM-227 would be the biggest vote of confidence in the program, and Bristol has hinted that this could potentially occur by year-end,” the report indicated.

On the AtraZeneca trial, analysts from Barclays said that despite the missed endpoint, MYSTIC will keep evaluating “co-primary overall survival (OS)” for the two versions of the study. However, results won’t be available until the first half of 2018.

For Bristol, we think the key near-term challenge will be to articulate the differences in trial design between MYSTIC and CM-227, which are meaningful, and that CM-012, while small in terms of patient numbers, has largely shown good efficacy results to date.

According to the note co-authored by Geoff Meacham, Paul Choi, Evan Seigerman and Jason Zemansky, Merck is in a position to capitalize on the data expected by the second half of this year on the KN-189 trial.

According to these analysts, KN-189 could see higher risks in its results due to cross-overs and a chemo arm to the study.

Despite these risks, we still believe that the KN-189 results should largely replicate the KN-021G data, and we continue to see an upward bias for Keytruda estimates as investors will likely largely replicate the KN-021G data, and we continue to see an upward bias for Keytruda estimates as investors will likely credit incremental market share for the next 1-2 years.

Recently, however, Merck experienced some setbacks on the trial as Keytruda failed to prove an extended survival rate compared to regular treatment. In turn, this put investors in a nervous position as they await, although the US Food and Drug Administration still gave the trial a fast track status.

Plans moving forward for AstraZeneca

As reported by The Guardian, this trial was a key element of CEO’s Pascal Soriot tenure and part of his mission to maintain the company independent -as it rejected a $117 billion acquisition bid from Pfzer (NYSE:PFE) and revitalize AstraZeneca’s drug platform.

AstraZeneca used the opportunity of this missed trial to announce a new partnership with Merck on an $8.5 billion deal to co-develop their own cancer therapies.

“That deal gives Merck rights to 50 percent of revenues earned from AstraZeneca’s PARP inhibitor Lynparza (olaparib) and other experimental treatment (if approved), while AstraZeneca will receive $1.6 billion upfront and another $750 million for license options.”

STAT News reported AstraZeneca also revealed Imfinzi alone wouldn’t have show much difference in deterring tumor progression, compared with chemotherapy, as part of a different group of lung cancer patients.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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