Recently, it was announced that AstraZeneca (AZN) had failed a phase 3 study treating patients with chronic obstructive pulmonary disease (COPD). This is a huge blow to the big pharma, but not all is lost because it still has another shot on goal for this indication from another phase 3 study. In addition, the biologic it used Fasenra, has already been approved by the FDA for severe asthma. For those reasons, AstraZeneca is still a good buy.
Phase 3 Trial
The phase 3 trial recruited a total of 2,000 patients who were randomized to receive either Fasenra as an add-on to dual or triple-inhaled therapy, or placebo. It was noted that the phase 3 trial, known as GALATHEA, did not meet the primary endpoint of the study. The primary endpoint was looking to see if the addition of Fasenra could achieve a statistically significant reduction of exacerbations in patients with COPD. While it is disappointing that the primary endpoint of the GALATHEA trial was not reached, it does not mean that the whole program is done for. That’s because there is another identical phase 3 study known as TERRANOVA. Whether or not this study achieves the primary endpoint remains to be seen. However, AstraZeneca has made it clear that it will evaluate its decision for the entire COPD program once the second study is concluded. TERRANOVA is expected to be readout in Q2 2018 (this quarter), which means there is a chance for a potential comeback for the COPD indication. There is still risk involved, as the trial could ultimately end up not meeting the primary endpoint like the GALATHEA study.
Leading The Way
Fasenra in COPD may or may not work out in the end. The truth is that AstraZeneca will be just fine even without the COPD indication. That’s because Fasenra has already been approved for another indication in multiple territories such as: U.S., Europe, Japan, Australia, and Canada. It is also under regulatory reviews in many other territories as well. Fasenra has been approved to treat eosinophilic asthma (a subtype of ashtma). Fasenra has two competing products for this indication. They are Nucala which comes from GlaxoSmithKline (GSK) and Cinqaero which comes from Teva Pharmaceuticals (TEVA). AstraZeneca wants to go after Nucala’s market share, which made around $300 million in the first 9 months of 2017. Cinqaero had a slow start, because the disadvantage it has is that it can only be given to patients intravenously. On the other hand both Fasenra and Nucala are given subcutaneously. However, I think that AstraZeneca has a good shot at coming in strong in this space. That’s because unlike Nucala, Fasenra is on an 8-week dosing schedule. Nucala is given on a 4-week dosing schedule. I believe that an easier dosing schedule for Fasenra is a major advantage to have. The space is getting crowded though, and even Sanofi (SNY) and Regeneron Pharmaceuticals (REGN) have their own add on version treatment to treat asthma Dupixent. However, the problem with that drug is that it has to be dosed every other week. When comparing all of the treatments for asthma, AstraZeneca is the clear winner here in my opinion, simply because of the longer breaks in between doses (8-week dosing schedule).
The one phase 3 trial failing in COPD is not a good thing by any means, but there is still an opportunity to post a comeback with the second study known as TERRANOVA. A big risk is that the second phase 3 trial may end up failing as well for COPD, and that means AstraZeneca would lose out on this big market opportunity. The good news is that the Asthma market is also a big market as well. It is estimated that both the COPD and Asthma market together are expected to reach $50.3 billion by 2022. However, its Fasenra drug already has an advantage over other competitors in the other indication eosinophilic asthma. It will still make a ton of revenue with Fasenra in the eosinophilic asthma indication, even if the COPD indication doesn’t pan out. For that reason, I believe that AstraZeneca is still a good buy.
This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical investment research service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to my Service, I’m currently offering a two-week free trial period for subscribers to take advantage of. My service offers deep dive analysis of many pharmaceutical companies throughout the biotech sector. Come see for yourself if my service is right for you.
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