AstraZeneca’s share price has dipped into the red today, with investors “underwhelmed” by its diabetes and heart failure drug Fraxiga.
The stock sank 1.8 per cent to 11,160p per share by early afternoon. However, the share price has grown 6.2 per cent over the past three months.
‘’Investors appear to have been underwhelmed by the update on Farxiga despite the diabetes drug showing it has the potential to treat a bigger pool of patients than previously indicated,” chief market analyst at Hargreaves Lansdown, Susannah Streeter, told City A.M.
“This may be because while major diseases have large markets, they also attract lots of competition, and even though Fraxiga could be used more widely, it’s likely rivals will also offer treatment options.”
In an update today, London-listed AstraZeneca revealed that Farxiga “significantly” lowers the risk of death in patients with heart failure.
The British pharmaceutical heavyweight would be wise not to stray too far from rare diseases, Streeter added, where competition is far lower.
AstraZeneca spent £28bn on rival Alexion in December 2020, which sought to use some of its fresh Covid-19 capital to pivot towards unaddressed illnesses.
“Breaking into this business didn’t come cheap and the acquisition’s sent net debt to uncomfortably high levels,” explained Streeter. “With interest rates set to continue to rise, the company is now under pressure to reduce its considerable debt burden.”
Jeff Henriksen, CEO of hedge fund Thorpe Abbotts Capital, added said while the tumble is not seen as a cause for concern, AstraZeneca will be “fighting for patients” with US rival Eli Lilly, which has a similar drug.
“It appears – without in depth research – both drugs work identically,” he told City A.M. “If that is the case, then the determining factor would come down to cost and they would need to make concessions to end up on US insurance formularies, likely to be their biggest market for this particular patient population.”
Natasha Boliter, senior analyst at pharma intelligence firm Citeline, added that “If the pooled analysis results can convince US and European regulators to widen access to Farxiga it will likely create more competition” with Eli Lilly and Boehringer Ingelheim’s “cornerstone” drug which is already approved for patients in the US and Europe.