AstraZeneca is the IBD Stock Of The Day amid growing enthusiasm for its cancer drug, Enhertu. But AZN stock hit resistance Monday on a refreshed donnybrook with Gilead Sciences.
Both companies released study results Monday for their breast cancer drugs. In this case, AstraZeneca and Gilead hope to treat two different populations of patients. But they use the same technology — albeit with different targets — to take on the fatal disease.
UBS analyst Michael Leuchten says AstraZeneca is redrawing the lines in breast cancer treatment with its Daiichi Sankyo-partnered Enhertu.
"The product is launching well and should drive growth to 2025," he said in a report to clients Monday.
But Leuchten has a neutral rating on AZN stock. He says Enhertu could be a $10 billion product with a potential $4 billion on top of that, depending on eventual approvals. But he's looking for AstraZeneca's next suite of cancer drugs to prove their salt beyond 2025.
AZN Stock: Replacing Chemotherapy?
AstraZeneca's Enhertu and Gilead's Trodelvy are both antibody drug conjugates, or ADCs. These drugs act like missiles, sending toxic chemicals directly at specific targets on cancer cells. Enhertu looks for HER2, a protein found on breast cells. Trodelvy seeks out TROP2, a protein tied to many cancers.
The end goal of these drugs is to replace chemotherapy, which has much more systemic impacts.
"The blue-sky scenario for ADCs is that chemotherapy as we know it goes away and more targeted delivery via ADCs takes over," UBS's Leuchten said.
But there are several challenges facing ADCs, which can also lead to systemic problems. Patients' bodies can also resist treatment, there are few protein targets to choose from and it's unknown whether ADC drugs can be added to other treatments.
Enthusiasm is there, though.
AstraZeneca Vs. Gilead In Breast Cancer
On Monday, AstraZeneca and Daiichi Sankyo said Enhertu significantly delayed disease progression in patients with metastatic breast cancer and high levels of the HER2 protein. The companies noted that roughly one in five patients with breast cancer belong to this high HER2 group. But Enhertu also has approval in the U.S. to treat metastatic breast cancer patients with low levels of HER2. That approval has buoyed AZN stock.
Gilead is hoping to secure some of this market with Trodelvy. Also Monday, Gilead said treatment with Trodelvy improved survival rates for patients with metastatic breast cancer and low levels of HER2. These patients also had high levels of other hormone receptors, estrogen and progesterone.
"Enhertu's overlap with Trodelvy's potential label and AstraZeneca's strong (effectiveness) data presented at the American Society of Clinical Oncology (meeting) this year leads us to expect an uphill commercial battle for Trodelvy" in hormone receptor positive metastatic breast cancer, SVB Securities analyst David Risinger said in his note to clients.
Fellow SVB analyst Andrew Berens has an outperform rating on AZN stock.
Highly Rated AZN Stock
On today's stock market, AZN stock edged up 0.3% to close at 66.81. Shares broke out of a double-bottom base with a buy point at 67.50 in late June, according to MarketSmith.com. But AZN stock has since dropped below the entry and is facing resistance there. Gilead stock jumped 5.2% to finish at 66.21.
AZN stock remains above its 50-day and 200-day moving averages and has a strong Relative Strength Rating of 87. This puts AstraZeneca in the leading 13% of all stocks in terms of 12-month performance, according to IBD Digital.
AstraZeneca stock is also in the top 5% of all stocks for fundamental and technical measures, reflected in its Composite Rating of 95.
Shares also are listed on IBD's SwingTrader.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
