AstraZeneca's Soriot faces off against skeptics, preaches late-stage R&D revival

AstraZeneca CEO Pascal Soriot

SAN FRANCISCO--First there was a blizzard of new drug deals. Now comes the forecast for sunnier financial weather ahead.

AstraZeneca CEO Pascal Soriot arrived at JPMorgan with a message: The pharma giant ($AZN) has beefed up its late-stage pipeline and is now ready to prove it can start to grow again in the near future as it pushes through one of the industry's most radical R&D reorganizations. As of today, AstraZeneca counts 11 drugs in late stages of development--just about double what Soriot inherited when he was named CEO a year ago--with another 27 coming up behind it. And it's mapped out a combo strategy for immunotherapies designed to get the company in the race to gain approvals and start growing oncology revenue.

Combined with new drugs in a diabetes alliance with Bristol-Myers Squibb ($BMY), which AstraZeneca is taking full control of in a buyout, and Soriot insists that the analysts' bleak long-term outlook is wrong. The company, he says, can now look forward to 2017, when he expects revenue will be in line with 2013 after a dangerous slide.

To back up his message AstraZeneca boldly outlined its pipeline of new meds, along with projected dates for approvals in the U.S., EU and Europe. Benralizumab, an experimental antibody for severe asthma, will be filed in the U.S. and Europe in 2016. The MEK inhibitor selumetinib will be filed in 2017.

The odds, though, aren't in AstraZeneca's favor. Late-stage pipelines typically experience a failure rate of around 50%. In addition, peak sales estimates are often way, way off. And just because Soriot is enthusiastic, he's still going to find plenty of skepticism among independent analysts, especially as many of the company's prospects were never considered big sellers in any case.

Panmure Gordon's Savvas Neophytou tells Reuters that Soriot's bullishness sounds too much like the same refrain repeated by ex-CEO David Brennan, who gradually lost the confidence of the market as the pipeline failed to live up to his projections. "In our view, management is stepping onto thin ice with this same sort of guidance," Neophytou told Ben Hirschler. 

In part, Soriot is his own victim. His first big move as CEO was to design a top-to-bottom research reorganization that will take years to complete. And he followed it with a series of very early-stage deals that will take years to produce pivotal data, feeding a story line that AstraZeneca has a very long road ahead before things get better. More recently AstraZeneca has been on a deal spree with more late-stage products in mind.

At the very least, Soriot has a tough sell in San Francisco today. In a few weeks he plans to detail the company's pipeline prospects, which might provide better detail. For now, he'll be joining the ranks of confident executives selling a bold vision of the future. It remains to be seen whether he gets many buyers.

- read the Reuters story
- here's the press release

Special Report: 2013's 25 most influential people in biopharma - Pascal Soriot

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