HSBC reiterates 'hold' on Astrazeneca

HSBC reiterated a ‘hold’ rating on Astrazeneca after the US consumer watchdog increased its drug safety warning of the risk of acute kidney failure for the SGLT-2 inhibitors Farxiga and Invokana.

The US Food and Drug Administration (FDA) has revised the warnings in the labels of the oral drugs used for type II diabetes to include information about acute kidney injury and added recommendations to minimise this risk.

HSBC said Farxiga, produced by Astrazeneca, is likely to be competitively disadvantaged.

“We continue to forecast peak sales of $2.6bn in 2023e for Farxiga (excluding the fixed dose saxagliptin/dapaglifozin combination). Farxiga accounts for 549p of our 4,240p discounted cash flow-derived target price,” HSBC said.

Type II diabetes prescription medicine Jardiance was excluded from the FDA’s warning, the bank noted. The drug is already widely expected to get the addition of cardiovascular benefit included on its label following an FDA Advisory Committee decision on 28 June.

“The exclusion of Jardiance from this latest warning announcement by the FDA should strengthen Jardiance’s competitive position within the SGLT-2 class, as the benefits seen with this drug appear to be due to the individual molecule, rather than a class effect.”

Shares climbed 0.64% to 3,835.50p at 1113 BST.