Winning hearts and minds for Astra

Crucial week for UK drugmaker as the world's leading cardiologists meet in America
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The Independent Online

It is one of the biggest jamborees in the global scientific calendar. Down the highway from the heart-stopping rides of Walt Disney World, some 30,000 doctors, scientists and pharmaceutical industry marketeers have converged for something altogether more racy: the American Heart Association's annual scientific conference.

With 3,700 presentations, lectures and discussions over four days, it is here that breakthroughs in cardiovascular medicine are hailed and where views on potentially life-saving new drugs can coalesce.

So it is more than just the corporate hospitality that draws members of the financial community here, too. To those who crunch the numbers on the world's pharmaceutical giants, market-sensitive news is revealed at the AHA. And this year it is AstraZeneca, the UK's number two drug maker, whose fortunes might be most seriously affected by what comes out.

Probably the two most important new drugs in the AstraZeneca medicine chest fall into the category of cardiovascular medicine: Crestor, the newly launched cholesterol-lowering pill that many hope will cut the risk of heart disease, and Exanta, the first blood-thinning drug to be developed for more than half a century.

The performance of the AstraZeneca share price over the past couple of days shows how seriously the AHA is being watched. On Monday, it was one of the worst performers in the FTSE 100 on fears that Pfizer, its arch-rival in the market for cholesterol-lowering drugs, had some powerful new research up its sleeve. And yesterday, it was one of the best performers - up 61p to 2,736p - after it presented its own positive study on Exanta.

Crestor and Exanta are vital in AstraZeneca's strategy for replacing sales of Losec, the ulcer pill upon whose blockbuster performance the company's success has been based. Losec - which is sold in the UK as Prilosec - once had sales of £10m a day but it has lost patent protection and is losing sales to cheaper copycat drugs. Sir Tom McKillop, the chief executive, has won praise for switching many Losec users to a second-generation pill, Nexium, but he needs new hits if the long-term future of the company is to be secured. With a bit of luck and a lot of marketing effort, Crestor and Exanta might replicate some of Losec's success.

They have to if AstraZeneca is to justify its toppy valuation, which puts it at a large premium to the rest of the global pharmaceuticals sector.

So can Exanta do it for Sir Tom? The drug is meant as a potential replacement for warfarin, a blood thinner developed almost 60 years ago and prescribed to those at risk of a stroke because of an irregular heartbeat or deep vein thrombosis. Warfarin is notoriously difficult to use, reacting badly with food and requiring constant monitoring and fiddling with dosage.

Exanta's use does not need to be monitored so closely, the AHA was told yesterday by Jonathan Halperin, a professor of medicine at New York's Mount Sinai School of Medicine and the lead investigator on AstraZeneca's 4,000-person trial. "If a person can take warfarin and take it well, it is highly effective at preventing strokes," he said. "It is a real problem, however, to deliver the drug consistently to patients, particularly the elderly. The risk of stroke, as well as the difficulties of using warfarin, particularly the increased risk of bleeding, increases with age, leaving too many patients under-treated." Yesterday's data was, in fact, bang in line with that from a smaller study released earlier this year, showing Exanta was as effective in preventing strokes among people with an irregular heartbeat - and easier to use than warfarin. The major relief was that the new data had not thrown up further worries over side effects. Already there is evidence that Exanta might damage the liver (6 per cent of users show raised liver enzymes that might signify damage) to give succour to those who think AstraZeneca will struggle to meet the more optimistic forecasts of $3bn in annual sales of Exanta.

Max Herrmann, an analyst at ING Financial Markets, is predicting peak sales of only $1.2bn. He explained: "It looks more and more likely the drug will be approved but there is concern over raised liver enzymes and whether that will impair use. Let's say the regulator introduces some liver monitoring requirement to make sure the drug doesn't do more damage to the liver. That would mean patients could not get their next prescription until they have undergone tests. That restriction would limit the sales potential."

Exanta is due on the lucrative American market in 2005, regulators permitting, so it will be some way behind Crestor, whose delayed launch was finally approved in August. And it is Crestor that will be, indirectly, in the spotlight at the AHA. Sir Tom has promised the product will take a fifth of the $20bn market for the cholesterol-lowering tablet, which means it must win share from Lipitor, the best-selling drug in the world, sold by Pfizer, the biggest drug company in the world.

Pfizer is out in force at the AHA and is today presenting data from its own 18-month study comparing Lipitor with a rival drug, Pravachol from Bristol-Myers Squibb, another US drug maker. New methods of diagnosis have allowed the trial to measure lesions and plaque inside coronary arteries - problems that can lead to heart attacks - and the buzz is that Pfizer will show Lipitor can dramatically slow or even reverse development of such problems.

The question is, how much more effective might it be than Pravachol? And does the similarity between Pravachol and Crestor mean that Lipitor could get a significant new advantage over AstraZeneca's drug? Is Sir Tom about to hit an iceberg in his titanic marketing struggle against Pfizer? Anthony Colletta, an analyst at Dresdner Kleinwort Wasserstein and a long-time bear of AstraZeneca, spooked the market on Monday with just such a prediction.

For its part, AstraZeneca is also conducting extensive research and believes all cholesterol-lowering drugs are likely to have the same effect against lesions and plaque. The trouble is, yet again Crestor is years behind its competitor in proving its claims, while Lipitor has years of patient data behind it.

This was, in essence, the point made inThe Lancet, the medical journal, last month in an editorial condemning Astra-Zeneca's marketing claims and urging doctors to think twice before prescribing Crestor in preference to other cholesterol lowering pills on the market. Sir Tom hit back at the article, saying Crestor was proven to be safe and effective, but there have been nerves ever since Bayer's Baycol had to be taken off the market after being linked with dozens of deaths from muscle wasting. In the US, Crestor has already attracted the attention of class action lawyers, who have set up websites urging patients who experience muscle pain to seek "immediate legal evaluation". With all the controversy, Crestor's sales targets could be hard to meet, some analysts say.

Sir Tom has been trying to widen the market's focus. Crestor is vital, of course. Exanta, too. But the company has one of the broadest portfolios of fast-growing or near-to-launch drugs in the pharmaceutical industry. Seroquel for mental illness and Iressa for lung cancer both managed above-forecast sales at AstraZeneca's last results, and management has begun talking about its "10 growth products". But this week, the focus is on just the two.

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