AstraZeneca Plunges After New Heart Disease Drug Fails Trial

It was just another manic market day, at least for AstraZeneca. 

Shares of the British-Swedish biopharmaceutical company tumbled Thursday after it shared the surprising failure of its drug Wainua to meet its target in a recent clinical trial. AstraZeneca and Ionis Pharmaceuticals said the heart disease treatment didn’t outperform the placebo in preventing heart problems in patients with transthyretin-mediated amyloid cardiomyopathy (or ATTR-CM), a rare and potentially fatal disease. 

It was a blow analysts weren’t expecting, and AstraZeneca’s shares fell as much as 10.6% in London, its largest intraday plummet since 2017, per Bloomberg. The company’s New York Stock Exchange-listed shares ended Thursday down 5.7%. 

High Expectations 

AstraZeneca is “meant to be able to have exceptionally good trial design ability,” Jefferies analyst Michael Leuchten wrote in a note following the news. Even so, the market reaction seems outsized for a clinical trial failure and is just the latest evidence that the stock market is dealing in extremes and making headline-based decisions. Results short of perfection can send investors on a selling spree while positive ones spur massive rallies, especially ones related to AI. For instance, as AstraZeneca’s stock was struggling, Micron’s popped after the announcement of billions of dollars in chipmaking investments, and stocks of AI infrastructure companies soared on news that Meta plans to start manufacturing an in-house chip. Speaking of Meta, the hyperscalers are playing a daily game of “they love me, they love me not” with investors. 

Of course, one company’s bad news is another’s opportunity: 

• The stocks of AstraZeneca rivals Pfizer, BridgeBio Pharma and Alnylam Pharmaceuticals, which sell treatments for ATTR-CM, all initially gained on the news. 
• BridgeBio ended the trading day up 15%, and Pfizer ticked up 0.83%. Alnylam reversed earlier gains, ending the day in the red. 

Euphoric Markets: When markets are this giddy, the is-it-or-is-it-not-a-bubble question never gets old. Savita Subramanian, head of US equity and quantitative strategy for Bank of America, recently pointed out a red flag to Barron’s: “When there’s massive outperformance of the high-multiple, high-expectation companies like we have seen lately, that tends to be a sign of speculation or FOMO,” she said. “It’s more psychological than fundamentals- or valuation-driven.”