Shares in AstraZeneca (AZN) crept up on news that the European Commission (EC) has approved its Lynparza treatment for women with advanced ovarian cancer. The treatment has been granted further clinical approval as part of an ongoing global strategic oncology collaboration with Merck & Co. And it follows the SOLO-1 trial in which Lynparza cut the risk of disease progression or death by 70 per cent.
With approval now granted, the collaboration with Merck dictates that AstraZeneca will receive $30m (£25.6m), which the group anticipates will be booked during the second quarter of 2019. Analysts at Shore Capital note that prior to the Merck tie-up, AstraZeneca had been targeting annual peak sales of $2bn for Lynparza, of which $400m related to ovarian cancer. Thus far, it has garnered around $2.6bn from the arrangement, of which $140m relates to regulatory milestones.
The group’s organic revenue streams have been drying up following patent expiration on some of its most lucrative pharma products. Early this year, it raised $3.5bn via a share placing to help fund the development of a new ‘blockbuster’ cancer drug alongside Japanese pharma group Daiichi Sankyo. However, this won’t be achieved overnight, so any boost to operational cash flows, even in the form of milestone payments, will be welcomed by shareholders.
