AstraZeneca's rosy pipeline promise runs into harsh realities in oncology

AstraZeneca's ($AZN) ambitious goal of boosting sales by 75% by 2023 relies heavily on its work in the high-profile field of immuno-oncology, but changing winds and rivals' successes might make it hard for the U.K. drugmaker to follow through on those promises.

AstraZeneca's key cancer asset is MEDI4736, a so-called checkpoint inhibitor that unblinds the immune system to better attack tumors. Last year, in an optimistic sales forecast unveiled to fend off Pfizer's ($PFE) advances, the company said its antibody would bring in $6.5 billion a year at its peak, arguing the treatment could lead to a new class of therapies that includes products from Merck ($MRK), Bristol-Myers Squibb ($BMY) and Roche ($RHHBY).

Now, as Bloomberg notes, the landscape has changed. Merck hit the market last year with its Keytruda, an inhibitor of the PD-1 pathway, getting approval for melanoma. Bristol-Myers' similar Opdivo picked up the same nod in December and this month became the first checkpoint blocker to win approval in lung cancer. Roche, meanwhile, is in the midst of pivotal studies on MPDL3280A, which blocks the related PD-L1 protein and is widely expected to be third on the market.

That leaves AstraZeneca on the outside looking in, Mirabaud Securities analyst Nicholas Turner told Bloomberg.

"If you're first mover, you could have a blockbuster. If you're fourth mover, unless you have something really significant as an advantage, it's difficult to see how you compete," he said.

AstraZeneca CEO Pascal Soriot

For its part, AstraZeneca believes MEDI4736 will eventually win out because of its potential in combination therapies, especially with the company's own tremelimumab. Each contender in PD-1 and PD-L1 is spending big on combination trials, mixing and matching cancer therapies to see which pairings can most effectively blast away tumors, and AstraZeneca is no different, testing its top prospect with 14 other agents.

Meanwhile, CEO Pascal Soriot is sticking to that pledge of delivering annual revenue above $45 billion by 2023. The company is touting a pipeline of 14 Phase III drugs that will make for 8 to 10 approvals over the next two years. AstraZeneca is counting on its resurgent oncology unit to lead the way, saying its three leading medicines have peak sales potential north of $12 billion on their own.

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