AstraZeneca plc (AZN - Get Report) shares traded near the bottom of the London market Friday after the drugmaker agreed a potential $6.9 billion deal with Japan's Daiichi Sankyo Co. to develop and market a breast and gastric cancer treatment over the coming years.
AstraZeneca will pay Daiichi, with whom it has a prior agreement to market the constipation drug Movantik, around $1.35 billion upfront, with incentives and targets pegged at $5.55 billion, for shared worldwide costs and profits for the drug, known as trastuzumab deruxtecan.
"We believe that trastuzumab deruxtecan could become a transformative new medicine for the treatment of HER2-positive breast and gastric cancers," said CEO Pascal Soriot. "In addition, it has the potential to redefine breast cancer treatment as the first therapy for HER2-low expressing tumours."
"It also has the potential to treat other HER2-mutated or HER2-overexpressing cancers, including lung and colorectal cancers," he added. "We are proud to be working with Daiichi Sankyo, a long-term collaborator of AstraZeneca in other disease areas."
AstraZeneca shares were marked 6.6% lower by mid-day London trading and changing hands at 6,066 pence each, a move that trims the stock's year-to-date gain to around 3.6%.
Last month, AstraZeneca said 2019 revenues would continue to rise thanks to increasing demand for its key cancer treatments after it posted stronger-than-forecast fourth quarter earnings.
Group revenues for the three months ending in December rose 11% to $6.417 billion, topping Street forecasts and driving earnings to 82 cents per share. Oncology drug sales led the advance, AstraZeneca said, rising 50% to just over $6 billion for the year, lead by its lung cancer treatment Tagrisso, a key challenger to Merck & Co.s (MRK - Get Report) potential blockbuster drug Keytruda.
"Our new medicines performed particularly well across the therapy areas and the Emerging Markets business went from strength to strength," Soriot said. "The performance of our new medicines demonstrated the ability of our commercial teams to convert the pipeline into successful medicines."