AstraZeneca: Etcamah Fails a Phase 3 Metastatic Breast Cancer Trial

Key Morningstar Metrics for AstraZeneca

• Fair Value Estimate
  : GBX 13,500
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

After the market close on Sept. 11, AstraZeneca AZN reported that Etcamah failed to show progression-free survival benefit in SERENA-4, a Phase 3 trial in the upfront first-line setting for hormone receptor-positive, HER2-negative metastatic breast cancer patients.

Why it matters: Etcamah is a newly approved oral SERD and one of Astra’s key oncology assets. Although disappointing, the outcome is not a big surprise given the failure of Roche’s persevERA trial reported in March, which tested giredestrant (also an oral SERD) in a similar first-line metastatic setting.

• Etcamah’s US approval is based on SERENA-6, which is also a metastatic trial but limited to the smaller “switch” setting. We expect sales for this setting to be limited by the novelty of the treatment paradigm, which has murky clinical validation and requires ctDNA monitoring every 2-3 months.
• Astra is running two early breast cancer trials, CAMBRIA-1 (“adjuvant extension” monotherapy) and CAMBRIA-2 (“upfront adjuvant” with a CDK4/6 inhibitor), with readouts expected in 2027 and 2030, respectively. We think that early-stage disease will be the majority of the commercial opportunity for the oral SERD drug class.

The bottom line: We maintain our fair value estimates for wide-moat AstraZeneca of GBX 13,500/USD 184 per share. Although we lower our 2035 revenue estimate for Etcamah to USD 1.8 billion in 2035, or about USD 700 million lower than our previous estimate, it is not enough to move our valuation.

• Shares are up 2% from the Sept. 10 close. Despite the negative readouts for Etcamah and Wainua (failed in transthyretin amyloid cardiomyopathy in July), we think Astra’s prospects are unchanged and view shares as modestly undervalued trading in 4-star territory.

Coming up: For the remainder of the year, we expect pivotal readouts for AVANZAR (Datroway plus Imfinzi and chemotherapy in first-line non-small cell lung cancer) and TROPION-Lung15 (Datroway with or without Tagrisso in second-line EGFR-mutant lung cancer).