阿斯利康

After the market close on Sept. 11, AstraZeneca reported that Etcamah failed to show progression-free survival benefit in SERENA-4, a Phase 3 trial in the upfront first-line setting for hormone receptor-positive, HER2-negative metastatic breast cancer patients.

Why it matters: Etcamah is a newly approved oral SERD and one of Astra's key oncology assets. Although disappointing, the outcome is not a big surprise given the failure of Roche's persevERA trial reported in March, which tested giredestrant (also an oral SERD) in a similar first-line metastatic setting. Etcamah's US approval is based on SERENA-6, which is also a metastatic trial but limited to the smaller "switch" setting. We expect sales for this setting to be limited by the novelty of the treatment paradigm, which has murky clinical validation and requires ctDNA monitoring every 2-3 months. Astra is running two early breast cancer trials, CAMBRIA-1 ("adjuvant extension" monotherapy) and CAMBRIA-2 ("upfront adjuvant" with a CDK4/6 inhibitor), with readouts expected in 2027 and 2030, respectively. We think that early-stage disease will be the majority of the commercial opportunity for the oral SERD drug class.

The bottom line: We maintain our fair value estimates for wide-moat AstraZeneca of GBX 13,500/$184 per share. Although we lower our 2035 revenue estimate for Etcamah to $1.8 billion in 2035, or about $700 million lower than our previous estimate, it is not enough to move our valuation. Shares are up 2% from the Sept. 10 close. Despite the negative readouts for Etcamah and Wainua (failed in transthyretin amyloid cardiomyopathy in July), we think Astra's prospects are unchanged and view shares as modestly undervalued trading in 4-star territory.

Coming up: For the remainder of the year, we expect pivotal readouts for AVANZAR (Datroway plus Imfinzi and chemotherapy in first-line non-small cell lung cancer) and TROPION-Lung15 (Datroway with or without Tagrisso in second-line EGFR-mutant lung cancer).

BLANK PAGEIn early-stage disease, we expect Roche's giredestrant to take the lion's share of the market due to its lead in clinical trial progress. It already reported positive data as a monotherapy in the upfront adjuvant lidERA trial, with a US target action date of Nov. 30, 2026. Assuming approval, we expect usage will be concentrated in "intermediate" and "medium" risk categories, as most higher-risk patients will likely opt for a drug regimen that includes a CDK4/6 inhibitor.

Astra's CAMBRIA-1 trial tests five years of camizestrant treatment as an "adjuvant extension" monotherapy against investigator's choice of standard endocrine therapy, following 2-5 years of adjuvant treatment with an aromatase inhibitor combined with a CDK4/6 inhibitor. The CAMBRIA-2 trial tests camizestrant against investigators' choice of standard ET as upfront adjuvant therapy. The trial permits usage of Verzenio, Eli Lilly's CDK4/6 inhibitor, in both treatment arms, which could potentially open up the higher risk market opportunity. This differs from Roche's lidERA trial, which did not test giredestrant with a CDK4/6 inhibitor, as this class was not yet approved in early-stage disease when lidERA was initiated.

For more perspective on the oral SERDs and the potential commercial opportunity in breast cancer, please see our recently published report, "Breast Cancer: Innovation at Roche, AstraZeneca, and Lilly."

We maintain our fair value estimate of $184 per ordinary share. Overall, Astra looks well positioned for low- to mid-single-digit growth for at least the next five years due to the strength of its in-line drugs and late-stage pipeline. We view the company as especially strong in oncology.

We expect Tagrisso (lung cancer with EGFR driver mutations) to enjoy peak sales of $8 billion by around 2030 before declining afterward. Other key drugs in the middle of their lifecycle include Calquence (blood cancers), Imfinzi (various cancers), and Ultomiris (complement-mediated autoimmune diseases). For its respiratory franchise, we expect steady revenue, with growth in Breztri and Tezspire offsetting declines in Symbicort.

We have strong growth expectations for recently launched drugs Enhertu (HER2-expressing cancers, especially breast cancer), Truqap (HR-positive breast cancers), and Wainua (transthyretin amyloidosis, a rare disease), as well as several pipeline drugs, including camizestrant (ER-positive breast cancer) and baxdrostat (uncontrolled or treatment-resistant hypertension), which could be approved in the second half of 2026.

Additionally, Astra has a large slate of pivotal data readouts over the next few years, including phase 3 trials for oncology drugs Datroway and camizestrant and cardiometabolic drugs laroprovstat (oral PCSK9 inhibitor for high cholesterol) and elecoglipron (oral GLP-1 receptor agonist for obesity and diabetes).

We expect that these growth drivers can more than offset declines in older drugs, including Farxiga (cardiometabolic drug) and Tagrisso. We forecast revenue declines to begin in 2026 for Farxiga and 2032 for Tagrisso.

We estimate a cost of capital of 7.1%, consistent with those of pharmaceutical peers.

Patents, economies of scale, and a powerful distribution network support AstraZeneca’s wide moat. Despite a relatively late emergence from the industry patent cliff that largely started in 2012, Astra's strong lineup of next-generation drugs should significantly offset sales lost to new generic competition. Further, we project that the majority of new drug sales will be supported in therapeutic areas with strong pricing power, with a heavy focus on differentiated oncology drugs such as Tagrisso, Imfinzi, Enhertu, and Calquence. The majority of the firm's pipeline focuses on differentiated drugs in critical-care markets, with the exception of the company's small-molecule respiratory pipeline, which looks less differentiated and likely to face pricing pressures in an area where payers have viewed slightly improved follow-on drugs as largely interchangeable with older medicines.

Astra's patent-protected drugs carry strong pricing power, which enables the firm to generate returns on invested capital in excess of its cost of capital. The patents also give the company time to develop the next generation of drugs before generic competition arises. Additionally, Astra holds a diversified product portfolio, with less dependence on any single drug. Its most significant loss of exclusivity events are generics competition for cardiometabolic drug Farxiga (which began in 2026), Lynparza (expected in 2027-28), and Tagrisso (expected after 2032 for major markets). Astra’s operating structure enables cost-cutting measures following patent losses, thereby reducing margin pressure from lost high-margin drug sales. Overall, Astra's established product line creates the enormous cash flows needed to fund the average $800 million in development costs per new drug. In addition, the firm's powerful distribution network sets up the firm as a strong partner for smaller drug companies that lack Astra's resources.

We think the firm does face environmental, social, and governance risks, particularly related to potential US drug price-related policy reform (close to one-third of sales are generated in the US) that could increase access by lowering drug prices. Ongoing product governance issues (including litigation related to side effects and patents) also weigh on the firm. While we have factored these threats into our analysis, we don't see them as material to our moat rating for AstraZeneca.

The company has a healthy oncology portfolio, including Tagrisso, Imfinzi, Calquence, Enhertu, and Truqap, which looks well positioned to drive major cash flows over the next decade.

The management team is focusing the pipeline toward areas of high unmet medical need, which should increase the odds of success and bring strong pricing power for the new drugs.

AstraZeneca has a large presence in emerging markets and should benefit from these markets' fast growth prospects.

The company's strong entrenchment in respiratory disease could cause challenges, as pricing power in this market tends to be weak.

Astra holds some litigation risk with several historical drugs focused in chronic care areas that may eventually spark legal concerns around long-term side effects.

Emerging EGFR drugs could pose a major threat to Astra’s high-selling drug Tagrisso if the new drugs are priced lower or have better clinical data.