AstraZeneca: Mixed Phase 3 Datopotamab Deruxtecan Data Pressures Stock, but Reaction Looks Overdone

AstraZeneca AZN reported mixed phase 3 data for datopotamab deruxtecan in lung cancer, but we don’t see the data as having a major impact on the firm’s fair value or wide moat. The cancer treatment datopotamab deruxtecan represents a moderate sales opportunity in our valuation model with peak annual sales close to $1 billion since we have only seen limited early-stage clinical data.

While AstraZeneca’s phase 3 data with the drug in lung cancer showed a statistically significant benefit versus chemotherapy in progression free survival, the drug didn’t yet show an overall survival benefit but trended well. Also, in time, the drug could show an overall survival benefit as well. The lack of an overall survival benefit and potentially some unclear side effects mentioned by the firm are likely causing pressure on the stock. However, given our more moderate outlook for the drug, we see the market reaction as overdone. Full details of the phase 3 study will be reported at an upcoming medical meeting.