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AstraZeneca trial fail may be bad news for Bristol-Myers

July 29, 2017

Could the failure of AstraZeneca (AZN)’s critical Phase III Mystic lung cancer trial provide some insight into a crucial Bristol-Myers Squibb (BMY) trial?

Investors may think so. As AstraZeneca share prices plunged on Thursday following news of the failure, so too did shares of BMS. AstraZeneca shares fell about 16 percent, costing the company approximately $10 billion in market value, while BMS fell about 6 percent. The sentiment of investors was echoed by Leerink analyst Geoffrey Porges. In a Thursday note, Porges said there are key differences between AstraZeneca’s Mystic trial and BMS’ CheckMate-227 trial testing a combination of PD-1 inhibitor Opdivo and Yervoy, an anti-CTLA-4 drug in treating non-small cell lung cancer (NSCLC). While there are differences, Porges said “they are unlikely to result in meaningfully different outcomes,” The Street reported late Thursday.

“The read through is an obvious negative read-through for BMY’s combo of Opdivo (nivolumab; anti-PD-1) + Yervoy (ipilimumab; anti-CTLA-4) in the ongoing CheckMate-227 trial,” Porges said.

In many ways, BMS is still suffering from a stinging setback last year when Opdivo surprisingly failed to meet endpoints in a Phase III trial. The anti-PD-1 drug failed as a monotherapy for a “broad patient population” in patients with previously untreated advanced non-small cell lung cancer.

In June, BMS suffered a market value loss of $4.3 billion after the company announced underwhelming news regarding survival rate in a Phase I lung cancer trial testing a combination of Opdivo and Yervoy. Updated two-year survival study showed the rate fell for patients with 50 percent or greater PD-L1 expression after two years, compared to the first year data. That trial, dubbed CheckMate-012, is seen by some as a precursor of information for the CheckMate-227 trial. BMS expects to report initial results from the CheckMAate-227 trial in early 2018.

On Thursday, AstraZeneca announced its Mystic trial, testing the combination treatment of PD-1 inhibitor Imfinzi (durvalumab) and tremelimumab, a CTLA-4 inhibitor, failed to meet endpoints. The company said the Mystic trial did not meet its primary endpoint in progression free survival in patients whose tumors express PD-L1 on 25 percent or more of their cancer cells. Adding insult to injury, AstraZeneca said that although it was not formally tested, Imfinzi as a monotherapy would also have failed to meet a pre-specified threshold of progression free survival over standard of care in the same disease setting. The trial will continue as there are other overall survivability endpoints in both the combination study and monotherapy study the company is awaiting.

While Porges’ note was certainly a dire prediction for BMS, some analysts suggest that the CheckMate-227 trial will stand on its own, regardless of AstraZeneca’s Mystic results. That’s what analyst Keith Speights said last month in The Motley Fool. “The bottom line is that Checkmate-227 stands on its own,” Speights wrote.

After the devastating plunge Thursday, shares of AstraZeneca are up more than 3 percent this morning, trading at $29.93 as of 11:14 a.m. Bristol-Myers is also climbing, up to $54.62 per share.

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