Woodford dealt AstraZeneca blow as share slump 17%

Pascal Soriot made revitalising AstraZeneca's drugs pipeline the centrepiece of his defence strategy against the takeover advances of US rival Pfizer.

That was three years ago. Thursday's news that a flagship lung cancer treatment might not be as effective as hoped for will only increase the pressure on the chief executive to deliver on those promises.

Shares in the company, held by a number of high-profile fund managers including Neil Woodford, slumped by an unprecedented 17% today following the setback in the Mystic study, which showed that injectable drugs in the trial were no more successful in stopping disease progression than chemotherapy.

Mr Soriot urged patience on the Mystic trial as further results on overall survival rates are due in the first half of next year. He also pointed to better news elsewhere, including for its lung cancer pill Tagrisso.

However, half-year results suggest there is little room for manoeuvre for Soriot after revenues declined 11% to $10.5 billion (£8 billion) in the first half of 2017.

This reflected the impact of patent expiries on blockbuster drugs in the United States, most notably the cholesterol drug Crestor and anti-psychotic medicine Seroquel XR.

Mr Soriot sought to reassure investors, saying the half-year performance was in line with expectations and that he remained excited about the company's "pipeline driven transformation".

He said: "In a pivotal year for AstraZeneca, we remain focused on realising the potential of our pipeline, growing our new launch medicines and bringing our strong science to patients."

Cantor Fitzgerald remains a supporter of AstraZeneca's strategy, despite the Mystic disappointment and the impact of competitive and pricing pressures on the company's diabetes and respiratory drug portfolio.

The broker has retained its 'buy' rating and said progress with the new oncology products Lynparza and Tagrisso was often overlooked.

AstraZeneca spurned Pfizer at £55 a share in May 2014, arguing that its value was at least 10% higher. The stock was today below £43, albeit with Liberum placing a fair value estimate of £49 a share on Astra.

It warned that share price recovery is likely to be a "long-drawn out process", particularly until detailed data from Astra's PACIFIC lung cancer trial is reported later in the year.

The share price slump may also put Astra back in the takeover picture, with Swiss pharmaceuticals giant Novartis seen as a potential suitor.

Elsewhere in today's half-year results, Astra announced an unchanged dividend of US$0.90 a share and reported earnings per share (EPS) of $0.80, up 58% on a year ago.

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