Biotech Movers: AstraZeneca plc (ADR) (NYSE:AZN) and Ardelyx, Inc. (NASDAQ: ARDX)

224

A new week is underway in the biotechnology space and we’ve already seen plenty of action. With earnings season still in full swing and a number of companies set to report this week, chances are we’re going to see a continuation of the volatile environment that we saw last week. Here is a look at two of the biggest movers from the end of last week that we think will likely keep moving near-term. The two companies we’ve set our sights on today are AstraZeneca plc (ADR) (NYSE:AZN) and Ardelyx, Inc. (NASDAQ: ARDX).

First up, AstraZeneca.

This one is a classic data-driven move. The company is developing a drug called Imfinzi as a potential therapy for lung cancer patients that already underwent chemotherapy. It is in a phase 3 study right now and AstraZeneca took an interim look at its performance and updated markets at the end of last week based on this insight. As it turns out, the drug has already hit its endpoint for the trial, and markets are responding to this news – as expected – positively. We didn’t learn too much about the specifics of the drug’s performance, with AstraZeneca set to report full data at a future medical meeting (as yet, undisclosed) but that the primary has already been hit suggests that the drug both extends life and inhibits disease progression in the target population. These are stage III lung cancer patients and – with them already having undergone chemotherapy – essentially have very little in the way of options. If the company can get this drug to market (and the latest news suggests that it should have no problem doing this) it could be a real winner for AstraZeneca, its shareholders and the lung cancer patient population. Analysts suggest that the drug will price in at $150,000 annually, giving it a relatively clean run to blockbuster status. At last close, AstraZeneca traded for $34 a share – a close to 10% run on its preannouncement market capitalization.

Next up, Ardelyx.

This one is, again, a data-driven move, but not in the same vein. On Friday, Ardelyx put out data from a phase 3 study for its lead development asset – a drug called tenapanor – that is currently under investigation as a potential therapy for the treatment of patients with irritable bowel syndrome with constipation (IBS-C). The trial hit its primary endpoint and 7/8 secondary endpoints but the company took a hit to its market capitalization on the news. At last count, Ardelyx traded for $7.45 a share – a close to 40% decline on its pre-release pricing. So why the decline? It is rooted in the drug’s performance against competitor therapies. As mentioned, tenapanor is targeting IBS-C, and a couple of other treatments are in late stage development right now (as well as already approved) for the same condition. The primary competitor for this one is a drug called Trulance, which is being developed by Synergy Pharmaceuticals Inc (NASDAQ:SGYP). The two drugs look relatively similar from an efficacy standpoint, but when you stack them up side-by-side and look at their safety profiles, Trulance comes out on top. Specifically, the latter has far lower diarrhea rates associated with it, and concurrently, a much lower hospitalization rate and discontinuation rate (based on the data that underpins its registration application with the FDA) due to diarrhea. As such, when physicians set out to prescribe a treatment for their patients who are suffering from IBS-C, they are likely going to lean towards Trulance as opposed to tenapanor, in an effort to minimize the potential for side effects in their patients. This is a billion-dollar market, perhaps more, and it looks as though Synergy is going to command the lion’s share of this market going forward. This doesn’t mean that tenapanor won’t be a revenue generator for Ardelyx, the company will likely be able to pick up a decent income from the drug in its position as a Trulance competitor, but it does mean that overall earnings potential will be limited somewhat by the inferior safety profile. That is, of course, if the FDA is willing to give it a green light. There’s every chance the agency will be happy to do so, but the disappointing safety data does add an element of uncertainty to that statement.

An ad to help with our costs