FDA Turns Down Fast-Track OK of AstraZeneca Cancer Drug

By Dow Jones Business News, 
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AstraZeneca PLC failed to win accelerated approval of a cancer drug in the U.S., dealing a blow to its new drug- development pipeline, a key plank of its defense in fighting off a $120 billion approach from Pfizer Inc. last month.

The company said an advisory committee to the U.S. Food and Drug Administration voted 11 to 2 against accelerated approval of its experimental ovarian cancer drug olaparib in patients with a specific mutation of the disease. The FDA isn't obliged to follow the committee's recommendations, although it often does.

Olaparib is one of a host of new cancer treatments AstraZeneca is hoping will become the mainstay of its business, reducing its current reliance on heart, lung and diabetes drugs. It is the first significant drug-development setback the company has had in the past six months. The company has demonstrated potentially promising trial results in a combination of its diabetes drugs and in a new cancer immunotherapy.

Investor excitement over AstraZeneca's cancer pipeline--including scientific advances that could potentially revolutionize treatment of the disease and command high prices--has supported a significant re-rating of the company's share price in the past year.

The idea that a Pfizer takeover approach might disrupt and delay the development of such pipeline drugs was a key reason cited by AstraZeneca Chief Executive Pascal Soriot for wanting to retain the company's independence.

Mr. Soriot has also set ambitious new targets for the company to hit $45 billion in annual sales by 2023, with almost a third coming from pipeline drugs. Last year, sales were $25.7 billion.

While the news is a setback for AstraZeneca, the number of patients with that form of ovarian cancer is relatively small--limiting that specific market for the drug. The company is now hoping that a further clinical study might prove the drug's efficacy.

Briggs Morrison, AstraZeneca's global medicines development and chief medical officer, said "we are disappointed with today's recommendation, and strongly believe that olaparib has the potential to provide patients with relapsed BRCA- mutated ovarian cancer and their doctors with a much-needed treatment option."

He added that the company aims to complete the further study by the end of next year.

Sanford Bernstein analyst Tim Anderson said in a note to clients the greatest impact of a potential FDA rejection of the drug was on investor perception of AstraZeneca's research-and-development abilities, adding "every bit of slippage at the company probably does tilt the balance slightly more in favor of a future PFE-AZN [Pfizer and AstraZeneca] tie- up."

Under U.K. takeover rules, Pfizer cannot return with another takeover offer before November, unless AstraZeneca invites it back for talks. Pfizer hasn't ruled out resuming discussions with AstraZeneca but is also looking at other opportunities for growth both inside the company and through other potential deals.

Mr. Soriot, meanwhile, is looking for other ways of maximizing value at AstraZeneca, in addition to his focus on developing its pipeline drugs. These could potentially include finding partners for its cancer drugs and exiting noncore areas such as anti-infectives and neuroscience.

Write to Hester Plumridge at Hester.Plumridge@wsj.com

Copyright (c) 2014 Dow Jones & Company, Inc.

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