AstraZeneca shares fall as Amgen ends psoriasis drug deal

Shares in drugmaker AstraZeneca fell 1.2%, as investors reacted to news that one of its partners, Amgen, was ending its collaboration to develop psoriasis drug brodalumab, after suicidal thoughts were observed in patients taking it.

Amgen and AstraZeneca had been sharing development of the drug since 2012, but Amgen said on Friday that it was ending the co-development and commercialisation agreement with Astra due to safety issues.

“Although AZN is currently considering the impact of the findings on its future development plans, even if it chooses to progress alone, it will face a very competitive market,” said Deutsche Bank analyst Richard Parkes.

Parkes noted that AstraZeneca’s share of brodalumab revenues contributed $437m to consensus sales by 2020.

Bank of America Merrill Lynch said that it expects the programme to be terminated by AstraZeneca, given that other agents such as Novartis’ Cosentyx, have not shown the same safety concern in psoriasis.

“While the news is disappointing, we continue to believe AZN has a broad pipeline which offers potential for it to deliver significant premium growth versus the sector,” said the bank.

UBS, meanwhile, said that while Amgen's decision may not spell the end of brodalumab, in view of increased uncertainty, it has removed the drug’s profits from its earnings model, resulting in a 3-9% cut in it earnings per share estimates for 2017 to 2020.

DB rates the stock at ‘hold’, while Bank of America and UBS rate it ‘buy’.