Eldon, Missouri – (StockNewsDesk) – 07/29/2014 — AstraZeneca has signed separate agreements with Roche and Qiagen for the development of blood based tests to detect tumors. The London-Swedish pharmaceutical giant has successfully worked with both companies in the past to develop similar tests for different drugs.
AstraZeneca’s motivations are clear on this deal; they want to do better and find a less expensive way to diagnose lung tumors and offer more targeted treatment based on the kind of tumor. This specific field of medicine is quite young, but it is believed by many to be the next leap forward as pharmaceutical companies are developing drugs for different types of cancers and tumors, rather than the one size fits all approach of the past.
With advances in genomics, pharmaceutical companies are getting closer to personalized medicines based on patient needs with these simple tests. Further, these advances have lowered the cost and time of drug development, one of the drivers in the incredible performance and profits of healthcare, biotech, and pharmaceutical stocks in the past five years.
AstraZeneca’s partnership with Roche and Qiagen is a natural step in this process. Roche and Qiagen are tasked with creating diagnostic tests that will enable the detection of cancer, cancer type, and whether medication will be effective. Most impressively, these tests will be based on a noninvasive blood sample rather than invasive surgeries requiring tissue samples or biopsy.
Qiagen has been already a leader in developing tests based on non invasive body fluids or blood samples to help identify effective treatment and, more importantly, identify treatments that could be deleterious or even fatal to patients. This is Qiagen’s second partnership with AstraZeneca for specific development of diagnostics for lung cancer patients.
These types of tests are forays into the next generation of medicine and enable practitioners to not only prescribe the right medicine with more accuracy but also monitor patient progress during treatment. Evidence based medical practices are superior to the older model of using a doctor’s judgment to prescribe medicine or running expensive tests, such as MRIs, which come with a higher error rate, preventing patients from getting the right care. Instead of lab analysis of tissue samples that is expensive and can take weeks, these genomic based tests analyze DNA and, in certain areas, already provide more precise diagnoses.
One of AstraZeneca’s biggest sources of revenue is its lung cancer pill – IRESSA. The test developed by Qiagen is for tumors that can be treated with IRESSA. Roche will work to develop a test for a new lung cancer drug developed by AstraZeneca called AZD9291 that treats a variation of this tumor. This drug, still in Phase 1 of clinical development, treats lung cancers that are resistant to current treatments.
Here is a long term chart of AstraZeneca:
Considering that AstraZeneca is already a massive company with billions in revenue, the company’s stock appreciation is even more impressive. In addition to the lung cancer treatments discussed in this article, AstraZeneca also has a string of new drugs in development and drugs that remain under patent, giving it a complete pipeline.
The company has also been impressive in its acquisition of smaller biotech companies doing work on promising drugs and partnerships to work in concert. Although AstraZeneca’s price has moved impressively, the results are less stellar for Qiagen and Roche, shown below:
The main issue is that drug diagnostics are a competitive business and, even with genomics, AstraZeneca could have worked with many companies. On the other hand, if someone wants to purchase this specific lung treatment cancer pill, they would have no choice but to buy from AstraZeneca, giving it a monopoly and pricing power, until the patent expires. Thus, if AstraZeneca executes, there will always be more upside for the stock.