The damage to AstraZeneca PLC (LSE:AZN, NASDAQ:AZN) from Wainua’s trial failure is less about the numbers than about a dent to management’s credibility, according to Jefferies.
The shares fell 9% and topped the FTSE 100 fallers’ list, a move the broker expects to exceed the drug’s actual contribution to valuation
Jefferies, which rates the stock a ‘buy’ with an 18,000p target, forecasts peak Wainua sales in the heart indication of $4 billion at a 60% probability. That equates to around 250p a share of risk-adjusted value, or roughly 2% of net present value. The bank’s blunt assessment is that the initial share price move will likely be double that impact.
The reason lies in expectations. AstraZeneca is regarded as capable of designing near-watertight trials, so a failure raises awkward questions. Jefferies pointed to a specific culprit: a 24% drop-in of rival drug tafamidis during the study, which lifted the share of patients on the competing treatment from 57% at the outset towards around 80%.