Shares of AstraZeneca, PLC (AZN - Free Report) have risen 4.8% so far this year against the Large-Cap Pharma industry’s decline of 4.9%.
Though the drug sector was off to a strong start in 2018, it has struggled thereafter, probably on U.S. market instability and a few negative updates on the pipeline and regulatory front. Only four large-cap drug stocks have risen this year including AstraZeneca, Merck (MRK - Free Report) , AbbVie, Inc. (ABBV - Free Report) and Glaxo (GSK - Free Report) .
Factors Driving AstraZeneca Stock
AstraZeneca announced quite a few positive developments on the regulatory and pipeline front this year, which led shares to outperform the industry.
AstraZeneca recorded good progress in Oncology in the first quarter of 2018. Lynparza received EU approval for a broad second-line ovarian cancer indication with the tablet formulation, and for breast cancer in the United States. Tagrisso received the important U.S. approval for first-line EGFR mutated non-small cell lung cancer (NSCLC). PD-L1 inhibitor Imfinzi was approved and immediately launched for the second indication in the United States — early stage lung cancer — which drove sales higher in the first quarter.
In hematology, moxetumomab submission was accepted by the FDA and granted priority review for an intended indication in third-line hairy cell leukemia. In CVRM, AstraZeneca received EU and U.S. approval for Lokelma to treat hyperkalemia. In Respiratory, biologic medicine, Fasenra was approved in the EU and Japan in January.
There were however a few negative pipeline updates. Fasenra did not meet the primary endpoint in the first COPD trial, GALATHEA. The ARCTIC trial of Imfinzi plus tremelimumab in third-line non-small cell lung cancer did not meet the primary endpoint of progression-free-survival (PFS) and overall survival (OS). Meanwhile, its core products like Nexium, Crestor and Seroquel are facing generic competition, which is hurting sales growth. The diabetes franchise also faces stiff competition while pricing pressure is hurting sales in AstraZeneca’s Respiratory franchise.
Nonetheless, AstraZeneca’s newer drugs like Brilinta (cardiovascular), Lynparza (ovarian cancer), Farxiga/Forxiga (type II diabetes) and Tagrisso (lung cancer) are doing well. Brilinta and Farxiga achieved blockbuster status in 2017, exceeding $1 billion in sales. Imfinzi and Fasenra, launched in 2017/early 2018, are off to a strong start given their highly competitive clinical profile. AstraZeneca is also looking for further label expansions for these drugs.
Its newer medicines registered sales growth of 66% in the first quarter of 2018. These new drugs should keep contributing to the top line while several launches are underway across each of the therapeutic areas, Oncology, CV metabolism and Respiratory. AstraZeneca is looking to return to growth in 2018 on the back of newer drugs. Meanwhile, cost-cutting initiatives should drive the bottom line.
All these positive developments are likely to keep the stock’s momentum alive this year.
AstraZeneca currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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