Bottom Line: Astrazeneca must prove it is worth more

Elizabeth Fournier
SINCE it officially rejected Pfizer’s approach on 2 May, Astrazeneca has issued no fewer than six updates to the market on its pipeline of drugs. To pharma novices, presenting “Phase IIb data on two novel investigational molecules” may mean very little, but to investors these announcements are like catnip, providing a glimpse into which drugs could be driving profits in the future.

So it’s no surprise that these updates have been coming thick and fast lately; AZ chief executive Pascal Soriot was fierce in his defence of the firm’s pipeline (particularly of cancer drugs) yesterday, and clearly thinks investors – and potential suitors – should be valuing them more highly.

So far, it’s not enough. The market remains unimpressed. After bumping above £49 earlier this month shares are now firmly below Pfizer’s £50 offer, and barely reacted to news last Thursday that MEDI4736 – the lung cancer treatment that Soriot hopes will bring in $6.5bn of revenues per year – had entered Phase III testing. If Astrazeneca can’t even convince its own investors that it is worth more, what chance does it have persuading Pfizer of the same?

That’s not to say these drugs don’t have the potential to be blockbusters – this is the most exciting line-up that Astrazeneca has had in a very long time and yes, it could make the company worth a much higher bid than what’s already been offered. But if that’s what Soriot wants – and it must be what many of his investors are after – then he needs to stop drip-feeding everyone minor updates and pull something truly impressive out of the pipeline.

But if that something doesn’t exist, then it’s time to start looking for a different escape route. And fast.