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AstraZeneca's shares surge on cancer drug hopes

AstraZeneca's oncology pipeline is attracting increasing attention
September 15, 2016

The majority of analysts who rate AstraZeneca's (AZN) shares a buy cite the oncology pipeline as the source of a substantial value. And despite the fact that the group itself has not updated the market, that carefully watched pipeline has been doing wondrous things for the share price. At the start of August, news that a competitive cancer product from B ristol-Myers Squibb (US:BMY) had failed a trial sent AstraZeneca's shares to their all-time high and on Monday shares side-stepped a FTSE sell-off on optimism for the potential blockbusters and speculation that the company could be a takeover target for Novartis.

IC TIP: Buy at 4,867p

Consensus expectation is that the combination cancer therapy currently being trialled by AstraZeneca could alone generate sales of $1.8bn by 2020. The drug, which targets PD-L1 and CTLA-4 cancer markers, is being tested for use in lung cancer with data read-outs expected by early 2017. Should the drug be approved - and risks have been marginally elevated by BMS’s failure - it will be the first combination cancer treatment to reach the market. That’s not to say it won't be contested, Merck (US:MRK) already has a PD-L1 lung cancer product approved and generating sales.