The pairing of AZ's new PD-L1 inhibitor Imfinzi (durvalumab) and CTLA4 blocker tremelimumab - the foundations of its nascent cancer immunotherapy franchise - as well as Imfinzi given on its own failed to improve progression-free survival (PFS) when given to newly-diagnosed non-small cell lung cancer (NSCLC) patients.
Final overall survival data is expected during the first half of 2018.
Given that the focus around AstraZeneca is on its pipeline, the first half results played second fiddle this morning.
Net income totaled $477 million compared with a loss of $3 million in the same quarter previous year as AstraZeneca reined in costs and increased sales of cancer drugs.
AstraZeneca's top line has been shrinking for several years as its historic best-sellers such as cholesterol-lowering pill Crestor lose patent protection, allowing cheap copycats to enter the market.
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As for dividend, that remained unchanged at US$0.90 (68.9p) a share as Astra repeated its full-year guidance.
Analysts at Jefferies said in a note this morning: "We have modeled $5.1 billion peak sales around Mystic, but heavily risk-adjusted: We now model around $3.3 billion in peak sales for durvalumab in metastatic NSCLC and around $1.8 billion for tremelimumab, which is primarily predicated on the outcome of Mystic". Obviously, today's news regarding its drug trial is disappointing, and it would not surprise me if its share price fell further in the short run.
"As a secondary endpoint, although not formally tested, Imfinzi monotherapy would not have met a pre-specified threshold of PFS benefit over SoC in this disease setting", the companies added.
The separately reported Phase III FLAURA study showed that Tagrisso monotherapy led to statistically significant, and clinically meaningful improvements in PFS compared with current 1st-line SoC using erlotinib or gefitinb, in previously untreated patients with locally advanced or metastatic epidermal growth actor receptor mutation-positive (EGFRm) non-small cell lung cancer (NSCLC).
Analysts reckon Tagrisso could have peak sales in excess of US$3bn a year.
AstraZeneca chief executive Pascal Soriot described the move as an "exciting step" with "a company that shares our passion for science to deliver new medicines for cancer patients". As part of the agreement, Merck will pay AstraZeneca up to $8.5 billion in total consideration, including $1.6 billion upfront, $750 million for certain license options and up to $6.15 billion contingent on successful achievement of future regulatory and sales milestones.