AstraZeneca Will Soar On 2 New Drugs In 2013

Jun.21.12 | About: AstraZeneca Group (AZN)

Cancer Research UK's Drug Development Office has begun a clinical trial to test AstraZeneca's (NYSE:AZN) AZD4547 drug. This drug may, if combined with chemotherapy, treat stomach or esophageal cancer. This is the first trial launched by the ECMC Combinations Alliance. The alliance was formed last year, and AstraZeneca is the first company to have joined the alliance. The primary purpose of the alliance is to provide wider access to new cancer treatments. In this case, AstraZeneca's experimental drugs are being combined with "standard chemotherapy, radiotherapy and other new experimental drugs." This combination aims to improve the effectiveness of our ability to treat this kind of cancer in patients.

The main purpose of the drug is to inhibit FGFR2. This is the protein that causes cells to grow. In cases of cancer, however, the FGFR2 protein tends to be faulty. As a result, cells grow and divide beyond control, resulting in what we call cancer. The drug developed by AstraZeneca will be given to patients that show higher-than-normal levels of this protein in their blood stream.

This new treatment may help AstraZeneca greatly, in terms of both reputation and stock value. There are very few treatments currently on the market for stomach and esophageal cancer. New therapies in this area are important. If AstraZeneca is successful with these endeavors, it may well be the first company to have made a breakthrough with this particular kind of cancer. That is something that will not be easily forgotten and will affect the stock positively.

AstraZeneca and Bristol-Myers Squibb (NYSE:BMY) have partnered up to create a drug aimed at treating type 2 diabetes. The drug has shown rather positive results so far. In the long run, this could be what helps the two companies become even bigger players in the pharmaceutical industry. There are already a number of treatments available for this condition, but most of them are not adequate for controlling blood sugar. The new drug, dapagliflozin, has proven to be a good option based on the clinical trials that have been conducted so far. A focus on conditions such as diabetes is a good way forward for pharmaceutical stocks. This should have a positive effect on both Bristol Myers Squibb and AstraZeneca stock.

There are a number of competitors to deal with in the diabetes-treatment domain. AstraZeneca will still have to contend with Merck's (NYSE:MRK) bestselling drug Januvia and the new Lantus insulin drugs from Sanofi (NYSE:SNY). In addition, it must also compete with canagliflozin from Johnson & Johnson (NYSE:JNJ) and linagliptin from Eli Lilly (NYSE:LLY). In other words, the field of diabetes treatment is very competitive, and a large number of companies are looking to establish themselves as leaders in this area.

AstraZeneca, furthermore, is not the only company that has been seeing positive results from tests. For example, Sanofi recently released the results of a clinical trial for a drug aimed at treating type 2 diabetes. The drug is known as Lantus, and it appears to be a more effective means of reducing the blood sugar levels of patients than a similar drug offered by Merck. The drug is far from perfect, however, as its efficacy is only significant when started early in the treatment process. Most doctors prefer to delay insulin treatment for as long as possible. In addition, it has more severe side effects than the drug offered by Merck, so I do not think Merck really has much to worry about. I expect this to have a fairly neutral effect on Sanofi stock and to have no real impact on Merck stock.

At the same time, AstraZeneca has been experiencing a bit of trouble recently. The company's new chairman has stated that there is significant change in store for AstraZeneca.

The new chairman, Leif Johansson, has a few things to worry about. First, he must find a new CEO for the company. This is important, as investors feel more secure when there is an indication of stable leadership in the company. Perhaps even more importantly, however, Johansson has to make a decision about the future of the company. Should AstraZeneca make acquisitions, or should it keep its focus on cutting costs even further? There are arguments in favor of each move. The outcome of this decision will have a huge impact on the company's future. In turn, it will also impact the stock price. It is essential that shareholders keep a very close eye on this issue. It seems likely that the company could go either way at this point.

Abbott Laboratories (NYSE:ABT) and Neurocrine Biosciences (NASDAQ:NBIX) are working together to find a drug that will treat the growing problem of endometriosis in women. This is something that costs the country billions of dollars every year, so a drug that deals with the condition may represent a significant revenue stream for these companies. This is good news for Abbott, which has been looking for a way to generate significant revenue for a while now. Stockholders are crossing their fingers for success from this endeavor. This will not have much impact on the stocks at the moment, but developments could lead to great gains in both stocks.

AstraZeneca is one of the better pharmaceutical stocks to keep an eye on at the moment. It is putting alot of effort and money into researching diabetes and cancer. There is a lot of competition in these arenas. I believe this is a good stock to add to your portfolio, and I would suggest hanging on to it if you already have an interest in it.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.