Soriot Stands By His Pledge For AstraZeneca

Executive Summary

Pascal Soriot stands by the ambitious growth target he set for AstraZeneca in his defense against Pfizer's 2014 bid for the company. Any shortfall in the target of $45bn by 2023 will reflect the weakening of the dollar rather than product challenges for the UK company, the bullish CEO told Scrip one day after the company delivered disappointing Phase III data that slashed around 15% from its share price.

Just one day after the revelation that AstraZeneca PLC's PD-L1 inhibitor Imfinzi (durvalumab) as monotherapy and combined with its CTLA-4 inhibitor tremelimumab had failed to meet the progression-free survival endpoints in the much-anticipated MYSTIC trial in first-line treatment of stage IV non-small cell lung cancer, CEO Pascal Soriot was standing by the ambitious sales growth targets he set for the company in 2014.

As he successfully defended AstraZeneca from a $119bn takeover bid by Pfizer Inc. in May 2014, he had said the UK company would achieve standalone sales of $45bn in 2023, driven by its diabetes and respiratory franchises and growth from the antiplatelet therapy Brilinta (ticagrelor), immuno-oncology sales and the PARP inhibitor Lynparza (olaparib). Now, despite pipeline setbacks and scaled down forecasts for Brilinta, he has claimed that "at this point there is no reason to think we can't achieve it", although with the subsequent decline in the value of the dollar, "$45bn is a bit more than $40bn at current exchange rates."

Meanwhile, the CEO argued that the market value of the company ought to reflect its profitability, "and some of the products we're launching are really profitable." However, he would not give mid-term guidance on profitability.

Soriot, speaking with AstraZeneca's chief medical officer Sean Bohen to a handful of broadsheet journalists and Scrip in the aftermath of the company's 15% share price plunge on July 27, sought to minimize the MYSTIC bombshell and emphasize the unexpected positives and future opportunities for AZ.

Tagrisso: Multi-Billion Dollar Product

The executives played up the opportunity for Imfinzi in Stage III lung cancer (on the back of the PACIFIC trial data), and argued that the FLAURA trial data on Tagrisso (osimertinib) in first-line EGFR mutation-positive NSCLC, also announced on July 27, had been under-appreciated. (Also see "AstraZeneca's Imfinzi Steals March Into Untapped IO Lung Cancer Territory" - Scrip, 12 May, 2017.)

"Two years ago, people were saying Tagrisso is behind the competition; it's not such a great product anyway. Now the competition has disappeared because of side-effects and there's no competition for three-four years," declared the CEO. "In the meantime, we've shown that Tagrisso penetrates the blood brain barrier – and 20-25% of patients in first line lung cancer with EGFR mutation have brain metastases. Tagrisso is as effective on those as it is on the lung disease, and it's going to be a multi-billion dollar product, and the data we announced yesterday will be presented soon, and they are really great data."

Other forthcoming growth opportunities included the anticipated approvals of acalabrutinib in blood cancer and benralizumab in severe, uncontrolled asthma – which Soriot described as "best in class" – as well as roxadustat, the hypoxia-inducible factor prolyl hydroxylase inhibitor for anemia in kidney disease which AZ in-licensed for the US and China from FibroGen Inc. and for which Soriot believes the market prospects are "potentially enormous." Soriot also believes SGLT2 inhibitor Farxiga (dapagliflozin) has a rosy future.

AstraZeneca currently invests a little over 50% of its R&D spend in oncology.

"We believed in OS and we still believe in it, and our investors are in the same place" – Pascal Soriot

In the words of Bohen, "if you don't have failures, you're not taking enough risks." Both executives underlined that for MYSTIC the end game has always been overall survival as opposed to progression-free survival. "With MYSTIC […] we tried to see whether with the PFS endpoint, that reached earlier than OS, we could get to market faster," said Soriot. "If [PFS] had been positive we would have been able to launch earlier – so it was a risk we took."

Indeed, that feverish race to market has claimed other casualties among AZ's rivals, most notably including BMS in first-line NSCLC (Also see "'Total Disaster' In First-Line Lung Cancer For BMS's Opdivo" - Scrip, 10 Oct, 2016.).

"But," said Soriot, "the reality is, we believed in OS and we still believe in it, and the investors I've talked to are basically in the same place. They see the totality of the picture. Of course they are disappointed, like we are, that PFS didn't read out." In fact, in a July 27 blog post, fund manager Neil Woodford wrote that the MYSTIC news "is not evidence of the failure of the drug, nor of the strategy, nor indeed of the rationale for my investment in AstraZeneca," adding that there was "more than enough evidence to show its chief executive's strategy is working" and that "very little of what I believe the company will achieve is reflected in today's share price".

Here To Stay?

Woodford's faith in Soriot's leadership chimes with the CEO's professed attachment to the role. "You don't commit five years of your life to try and do something and give up as you think you're almost getting there," said Soriot, while refusing to comment on rumors that he may have spoken to Teva Pharmaceutical Industries Ltd. about the CEO vacancy there. "I can only say that it would break my heart to not see the opening of this Cambridge building; that's an important part of this journey," he added.

The relocation of AZ's headquarters and UK R&D hub to Cambridge is currently delayed by 3-5 months, with the opening expected in the second half of 2018.

Asked when he would consider his mission accomplished, Soriot said it would be a couple of years away at least, "when we've launched all these products and they're starting to grow and we can show the engine is renewing the pipeline, and we're out of this transition phase of losing patent protection on key products and reinvesting in the future."

Even if neither he nor his investors currently wish him to leave AstraZeneca, whether he will still be there in six years' time to oversee the fulfillment of his post-Pfizer growth pledge is another matter, and one which will hinge not solely on the fact that, as Soriot revealed, "at some point I will want to go and see my grandson in Australia and retire there."

Not that it will rest just on the MYSTIC PFS read-out, nor even on MYSTIC OS data, either. From respiratory to diabetes, kidney disease and across the gamut of oncology, AstraZeneca can still count on a considerable number of impending trial results, approval decisions and existing product expansion possibilities. However, with every late-stage trial miss – and in recent times these have included the likes of tralokinumab in asthma, MEK inhibitor selumetinib in NSCLC, Brilinta in important additional indications and now MYSTIC – the pressure mounts on Soriot to convert the remaining opportunity into extraordinary results.