AstraZeneca-Daiichi’s Enhertu Gets US Approval For Gastro Cancer Use


AstraZeneca Plc’s and Daiichi Sankyo Co Ltd.’s drug Enhertu (trastuzumab) has won approval in the US to be used in the treatment of advanced gastric cancer.

Specifically, AstraZeneca (AZN) has been okayed by the US Food and Drug Administration (FDA) for the treatment of adult patients with locally advanced or metastatic HER2-positive gastric or gastroesophageal junction (GEJ) adenocarcinoma who have received a prior trastuzumab-based regimen.

Following the US approval milestone, AstraZeneca now owes its partner Daiichi $115 million. Sales of Enhertu in the US are recognised by Daiichi. AstraZeneca reports its share of gross profit margin from Enhertusales in the US as collaboration revenue.

Gastric cancer is the fifth most common cancer worldwide. In the US, it is estimated that 27,600 new cases of gastric cancer were diagnosed in 2020 and more than 11,000 people died from the disease. The British drugmaker noted that in the US, gastric cancer is most frequently diagnosed in the advanced stage, with only about 5% of patients surviving beyond five years. Approximately one in five gastric cancers are HER2 positive.

“Today’s approval of Enhertu represents the first HER2-directed medicine approved in a decade for patients with HER2-positive metastatic gastric cancer,” said AstraZeneca’s Dave Fredrickson.

The approval by the FDA was based on positive results from the randomised Phase 2 trial conducted in Japan and South Korea. According to the trial results, Enhertudemonstrated a statistically significant and clinically meaningful improvement in overall survival (OS) and objective response rate (ORR) versus chemotherapy in patients with advanced gastric cancer or GEJ adenocarcinoma who had progressed on at least two or more prior regimens including trastuzumab plus a fluoropyrimidine- and platinum-based chemotherapy combination.

“The results from the trial highlight the potential to change clinical practice, showing a 41% improvement in survival and a response rate more than three times higher with Enhertucompared to chemotherapy,” Fredrickson added.

This marks the second FDA approval for Enhertu following its approval for use in the treatment of adult patients with unresectable or metastatic HER2-positive breast cancer who have received two or more prior anti-HER2-based regimens in the metastatic setting.

AZN shares have dropped 16% over the past six months and are up 1.6% over the past year. (See AstraZeneca stock analysis on TipRanks). That’s with a Strong Buy analyst consensus backed by 6 Buy ratings versus only 1 Hold rating.

What’s more, the average analyst price target stands at $67.50, which puts the upside potential at a promising 32% in the coming 12 months.

Morgan Stanley analyst Mark Purcell last month upgraded AstraZeneca to Buy from Hold and selected it as a preferred large-cap growth stock across the European biopharma sector. One of the reasons cited for the rating upgrade was the strength of the company’s cancer drugs, Calquence and Farxiga. Purcell noted that the company’s oncology pipeline has driven rapid sales growth in the past two years following a number of lean years.

The analyst expects AstraZeneca to generate 9% sales growth and 19% EPS growth over the next five years.

Meanwhile, the stock  scores a Market Neutral 6 on Tipranks’ Smart Score rating, indicating that it is most likely to perform in line with market averages.

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