AstraZeneca (LSE: AZN) shares closed at 8,317p on Friday, 20 November. At the time of writing, shares in the UK pharmaceutical giant are changing hands for around 7,685p. That means the AstraZeneca share price has fallen by 7.6% in a week.
Last week encouraging results emerged from trials to test the effectiveness of the vaccine developed by the partnership of Oxford University and AstraZeneca. However, this week has seen concerns raised about the trial. The fall in AstraZeneca’s share price over the course of this week is a result of those concerns.
AstraZeneca’s coronavirus vaccine trial
AstraZeneca reported that its AZD122 coronavirus vaccine had met its primary efficacy endpoint in preventing Covid-19 on 23 November 2020. On average, subjects given the vaccine developed 70% fewer cases of Covid-19 than those in the placebo group. But, there were, in fact, two dosing regimes. A half dose was given to 2,741 people, followed by a full dose of the vaccine 28 days later. Also, two full doses were given to 11,636 people a month apart. A 90% efficacy was reported for the half-dose regimen, and 62% for the full-dose one.
The disquiet around the results of the vaccine trial centre around the two-dosing regimens. Giving a half-dose followed by a full one seems to be the optimal dosing schedule based on the 90% efficacy. However, the number of subjects in the half-dose group was relatively small, and the efficacy of 90% could be an anomaly. It turns out that the half-dose regimen came about by mistake. Oxford University announced this Wednesday that a manufacturing problem — which has been fixed — was the reason for half-doses being given to some trial participants.
If a half then full dose was given to a small subset of participants, there might not be enough evidence to approve the seemingly optimal dosing regimen for AZD122. But the increased efficacy might also disappear with further study, which would bring the average closer to the 62% reported for the full-dose group.
AstraZeneca share price effectiveness
Regulators have set a threshold of 50% for vaccine approval. So, AZD122 would appear to be still able to surpass that. But the dosing issue is likely to at least delay approval. Data gathering and analysis continue. Still, it remains to be seen how the two dosing arms of the study can be reconciled. Reconciliation is needed to arrive at a true picture of the optimal dose of AZD122 and its effectiveness.
Analysts have reported that AZD122 could be worth around $1.5bn a year in sales to AstraZeneca. Investors will be concerned about the delay or potential loss of that revenue. That has put pressure on AstraZeneca’s share price. However, it’s worth pointing out that since hitting an all-time high of 10,120p on 20 July 2020, AstraZeneca’s share has been losing ground. This week’s price action does not mark a sudden reversal in AstraZeneca’s fortunes. Were those highs hit based on unrealistic expectations of what a coronavirus vaccine could bring to AstraZeneca’s bottom line? After all, $1.5bn of revenue sounds like a lot, but it would grow 2019 revenues by a rather more modest 6%. Is that alone enough to justify the AstraZeneca share price trading at 56 times 2019 earnings per share?