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Good News for AstraZeneca

Zacks Equity Research

Good news flowed in at AstraZeneca (AZN) with the American College of Cardiology Foundation (:ACCF) and American Heart Association (:AHA) panel of experts updating their guidelines and issuing a class 1 recommendation for Brilinta (ticagrelor). The class 1 recommendation was issued for the use of Brilinta in invasively and non-invasively managed patients suffering from unstable angina (UA) or non–ST-elevation myocardial infarction (:NSTEMI).

We note that anti-platelet Brilinta has received the highest recommendation issued by the guidelines committee. We believe that this will encourage physicians to prescribe Brilinta and provide a much needed boost to Brilinta sales.

Brilinta is approved for reducing the rate of heart attack and cardiovascular (:CV) events in adult patients with acute coronary syndrome (:ACS) including UA, NSTEMI and ST-elevation myocardial infarction (:STEMI).

Brilinta was approved in the US in July 2011. However, Brilinta’s sales have been lackluster so far. Brilinta sales amounted to $9 million in the first quarter of 2012 compared with $5 million in the fourth quarter of 2011. In April 2012, AstraZeneca collaborated with The Medicines Company (MDCO) to market Brilinta in the US. The Medicines Company’s strong presence in the hospital setting should help drive Brilinta sales.

Brilinta competes with other drugs in the anti-platelet market including Bristol-Myers Squibb & Co. (BMY) and Sanofi’s (SNY) Plavix (clopidogrel) and Eli Lily’s (LLY) Effient (prasugrel).
Neutral on AstraZeneca

We are encouraged by AstraZeneca’s focus on high-potential emerging markets and are pleased with its effort to drive the bottom line through cost-cutting initiatives and share buybacks.

However, we remain concerned about the generic competition faced by the company’s key products. In 2011, the company lost revenues worth almost $2 billion to generic competition. The weak late-stage pipeline coupled with slow Brilinta uptake also bothers us.

We currently have a Neutral recommendation on AstraZeneca. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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