AstraZeneca has trumpeted progress with its research pipeline, a week before US rival Pfizer can return with another bid for the UK drugmaker.
Britain’s second-largest pharmaceutical company brought forward the filing date of a new lung cancer pill, as it flagged up its “industry-leading” immuno-oncology portfolio of drugs that harness the body’s immune system to fight tumours. It hopes to get between eight and 10 new drugs approved within the next two years across all disease areas, with 14 medicines going through their final stages of testing.
Chief executive Pascal Soriot and other executives will brief investors on the company’s research pipeline at a six-hour meeting on Tuesday afternoon – eight days before Pfizer, which walked away from its £70bn bid in late May after being rebuffed, can make a fresh takeover approach.
Influential fund manager Neil Woodford, who left Invesco this year to set up his own firm and is a long-term investor in AstraZeneca, said his belief in the company’s independent prospects were now even stronger. He was instrumental in toppling Soriot’s predecessor David Brennan and also played a part in blocking the merger of defence groups BAE Systems and EADS in 2012.
Woodford, who put the chances of a new bid from Pfizer at 50-50, said: “At the time of the initial approach from Pfizer, we strongly believed that an independent AstraZeneca would achieve far better returns for its shareholders than the offer from Pfizer could have delivered.
“That remains the case, although six months on, our confidence in this belief is even stronger and the progress being made by the company is tangible.”
Pfizer struck a deal with Germany’s Merck on Monday for the rights to a cancer drug that targets anti-PD-L1 antibodies to block tumours – similar to AstraZeneca’s MEDI4736. The move was seen as a sign of Pfizer’s waning interest in AstraZeneca.
Soriot once again pointed to the failure of the AbbVie takeover of Shire owing to tighter US rules on tax inversion deals, whereby a US company acquires a foreign firm to shift its tax base abroad to cut its tax bill. “The tax inversion risk we identified as a risk in the end proved not only to be a risk, but a reality,” he reiterated. “It would have created a very substantial distraction to the company”, he said, if AstraZeneca had given in to Pfizer’s advances only for the deal to fall apart over tax.
Soriot said he and his team were “more confident than before” in AstraZeneca’s ability to generate more than $45bn (£29bn) in revenues by 2023, a forecast that was criticised by analysts for being too ambitious when it was first made in May. He cautioned, however, that “we realise we are in a risky industry”.
AstraZeneca is racing ahead with AZD9291, a lung cancer pill developed in the UK that is now due to be filed for approval in the second quarter of 2015, rather than in the second half of next year. Rival Clovis Oncology is developing a similar medicine. AstraZeneca, which faces patent expiries on several blockbuster drugs in the coming years, declared that cancer drugs would become its sixth growth platform, along with heart drug Brilinta, diabetes, respiratory, emerging markets and Japan. Biological medicines now account for nearly half the research pipeline.
Citigroup analyst Andrew Baum said there was little new in the update. “We continue to believe that the market materially underestimates AstraZeneca’s future cash flows, especially within immuno-oncology and Brilinta. AstraZeneca remains our preferred global name among the multinationals.”
He added: “Yesterday’s announced collaboration between Pfizer and Merck has decreased the market perception of Pfizer’s interest in AstraZeneca, but we believe there is some residual probability of a Pfizer return post-26 November.”
