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LONDON/NEW YORK (Reuters) - Investors in drugmaker AstraZeneca (AZN.L) have taken defensive positions in the options market ahead of eagerly awaited results of a major trial of a lung cancer treatment, which are due any day now.
The British group is hoping to secure a substantial slice of a multibillion-dollar market by proving its combination of two immunotherapy drugs, durvalumab and tremelimumab, can help previously untreated patients with advanced lung cancer.
However, the outcome of the so-called MYSTIC trial may not be clear cut, given the complex nature of the experiment.
Immunotherapies, which boost the immune system's ability to fight tumours, promise to revolutionise cancer care, prompting a race among companies to develop rival treatments. Lung cancer is the single biggest market opportunity.
Among AstraZeneca's competitors, Merck & Co (MRK.N) has already received the green light to sell a combination of its immunotherapy drug Keytruda with chemotherapy, while Bristol-Myers Squibb (BMY.N) and Roche (ROG.S) are also awaiting important combination drug data.
AstraZeneca has said that initial results from the MYSTIC trial are due by mid-year, leading many analysts to expect news at the end of June or early July.
For the company's U.S.-listed shares (AZN.N), where options trade is most liquid, near-term positions are skewed towards defensive put options. Among contracts expiring this week and next, which might be expected to capture the first impact of the trial, there are 3.3 put options open for each open call option.
Put options convey the right to sell shares at a set price at a future date and are usually used for bearish bets, while call options give the right to buy at a certain price at a future date and are typically used to place bullish bets.
An analysis of options contracts also shows traders expect the shares to move about 8 percent in either direction by the third week of July.
The MYSTIC trial has been a focus for investors because AstraZeneca Chief Executive Pascal Soriot has invested heavily in oncology to offset declining sales of older blockbusters such as cholesterol fighter Crestor and heartburn drug Nexium.
Analysts at UBS, however, said on Tuesday that the market might be expecting "more clarity, more quickly, than MYSTIC will reasonably deliver".
The headline results due in the coming days could leave many questions unanswered. Details on how well treatment extends the time before cancer worsens, for example, are set to be presented at a medical congress later this year, while overall survival data may not be ready until 2018.
The MYSTIC trial will also analyse how the drug combination, or durvalumab on its own, helps different subsets of patients, depending on their levels of a protein called PDL-1.
Hopes for AstraZeneca's immunotherapy business received a significant boost last month when a separate trial showed durvalumab reduced disease progression in a different group of lung cancer patients with earlier-stage disease.
Editing by David Goodman