AstraZenecaThe failed late-stage Wainua test was not expected to have a significant financial impact on the company.
Most analysts estimate that test misses only account for 2-4% of their estimation models. Yet shares lost nearly double that in one session, suggesting the market’s reaction reflected more than just the loss of one drug, which was intended to treat a rare heart condition.
The shutdown has shifted attention away from Wainua itself and onto something more difficult to measure: whether the prices investors have long reserved for one of Europe’s most heavily trafficked drug pipelines is worth it.
For many years, AstraZeneca has commanded among the richest figures among the largest European pharmaceutical companies with the view that management always delivers successful late-stage clinical trials in all oncology, rare diseases, and specialty drugs, and fills its portfolio with new blockbuster drugs.
Under CEO Pascal Soriot’s 14-year reign, AstraZeneca has established itself as a pharma powerhouse that rarely posts negative test results.
Wainua itself was not expected to become one of AstraZeneca’s biggest brands. Rather, the surprise lay in the failure of a program that many investors considered to have a high chance of success.
Analysts in particular say the disappointment doesn’t destroy AstraZeneca’s long-term growth story, but it may raise the bar to prove it.
The issue goes beyond the additional revenue Wainua could add to AstraZeneca’s top line, as it undermines the company’s credibility, Jefferies analysts wrote in a note to clients on Thursday.
“This was meant to be a slam dunk that made the failure a surprise.”
More than one drug
The financial impact of Wainua’s failure as a treatment for ATTR cardiomyopathy, a rare and life-threatening heart condition, appears modest in comparison.
Citi puts the current value of the total impact at around 3%. Jefferies estimates around 2%, and Leerink Partners’ target reduction implies a similar estimated hit. Bank of America described the sales impact as “mid-single digits,” while Morningstar said Wainua’s lower sales estimates did not materially change its rating.
Those estimates belied the market’s reaction as shares fell 6.2% in Thursday’s session, marking the stock’s worst day in two years, and fell a further 3% on Friday.
An AstraZeneca spokesman declined to comment further on the share price reaction.
Rather than simply remove the Wainua sales component from their models, investors may re-evaluate the confidence they place in AstraZeneca’s broader pipeline and performance.
Dan Coatsworth, head of markets at AJ Bell, noted that AstraZeneca has had more hits than misses recently, leading to high expectations for success.
“AstraZeneca has aggressive plans for $80 billion in sales by 2030, and investors are about to question whether this target is credible,” Coatsworth said in an email.
Jefferies said the failed trial does not threaten management’s 2030 ambition, and Citi continues to expect the company to exceed that target.
Leerink noted that, after speaking with management, removing Wainua for ATTR-cardiomyopathy reduces headroom over the deal the company provided by about $82.7 billion to about $80.8 billion, which represents $1.9 billion in Wainua’s 2030 revenue.
Morningstar left its fair value rating unchanged, saying the setback “does not change our view of its late-term drug development capabilities,” while noting AstraZeneca’s oncology franchise, rare disease business and broader pipeline remain intact.
Both Goldman Sachs and Bank of America highlighted that investors did not think the case might fail, given the positive precedent from Alnylam’s a competitor of the drug Amvuttra that works similarly.
Shrinking margin by mistake?
The failed lesson also comes at an important time for AstraZeneca.
Most of the company’s major pipelines—for lung cancer, SERENA-4 for breast cancer, and cliramitug for ATTR cardiomyopathy—are expected to report data in the coming months, meaning investors’ attention is now focused on a few high-profile studies.
AstraZeneca’s London-listed shares in the last 12 months.
“All eyes on AVANZAR,” Jefferies wrote, describing it as the next big move that could determine sentiment. Studies are expected in July or August.
Leerink suggested that the rollback is putting more emphasis on “binary events” that are expected later this year.
Many analysts continue to recommend buying the stock. Citi reiterated AstraZeneca as its top European pharma pick, Bank of America reiterated its buy rating, and Jefferies said investors should “buy the dip.”
