AstraZenecas(LSE: AZN) future growth rests on the success of the company treatment pipeline, and Brilinta is one of the companys most important treatments under development.
Brilinta is a blood thinner and, according to the Citys top pharmaceutical analysts, it is Astras best chance of returning to growth.
The drug has huge potential. According to analysts, Brilinta could be Astras next blockbuster treatment and its estimated that annual sales of Brilinta could top $5.5bn by 2020. Astra reported fourth-quarter 2014 revenue of $6.7bn, so its clear how important the commercialisationof this treatment is to the company.
And on Saturday, the results of a key study on Brilintas potential will be released.
A key study
The study, known asPEGASUS, will be officially published this weekend. Although Astras management has already revealed that the PEGASUS study showed a statistically significant reduction in patent mortality with no unexpected safety issues while using Brilinta.
Nevertheless, until the final, official report is published on Saturday, any speculation on the success of Brilinta is just that: speculation.
Still, theres no doubt that any positive data in PEGASUSshould helpunlock Brilintas multi-billion-dollar potential. This would complete a major milestone of Astras plan to return to growth by 2017.
Plenty of room for growth
Brilinta is not Astras only chance to turn around its fortunes. Many analysts believe that the company has one of the best treatment pipelines of all European pharmaceuticalcompanies.
In particular, Astra has eight potential blockbuster treatments in their late stages of development. All eight treatments are facingcritical milestones during the next 18 months.
It is estimated that these eight treatments alonecould generate sales of up to $25bn by 2023. These figures show that Astras best days are ahead of the company.
Based on these growth prospects, Astra deserves a premium valuation.Pharmaceutical companies rely on their treatment pipelines to keep sales growing and in many respects, every drug maker should be valued according to the prospects of its treatment pipeline.
On this basis, Astra deserves to trade at a premium to its European peers as analysts believe that the company has one of the best pipelines in Europe.
Astras main European peers areSanofi,RocheandNovartis, and these three trade at an average forward P/E of 19.4. Astra, on the other hand, is currently trading at a forward P/E of 16. So the company looks to be severely undervalued compared to its European peers.
Theres also Astras dividend yield to consider, which currently stands at 4.2%, compared to the FTSE 100s average dividend yield of 3.5%.
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