Last month, British drugmaker AstraZeneca (AZN 0.18%) received good news from the U.S. Food and Drug Administration (FDA) on a potential rescue-inhaler treatment for asthma currently called PT027. The regulatory agency's Pulmonary-Allergy Drugs Advisory Committee (PADAC) voted 16 to 1 to recommend approval in patients at least 18 years old.

With a decision from the FDA expected for the first half of 2023, there are a couple of important questions that investors might have. What was behind PADAC's overwhelming vote to recommend approval of PT027 for adult asthma patients? And how much of a boost could this indication provide to AstraZeneca?

The results of the phase 3 clinical trial for PT027 and the asthma rescue-inhaler market can address these questions.

The therapy could prevent hospitalizations and save lives

Asthma is an incurable inflammatory condition of the lungs. Patients often experience wheezing and shortness of breath, which can vary in severity and frequency over time. And while treatment of the condition and control over the disease can help, there is still a chance that severe exacerbations or asthma attacks could happen at any time.

That's why on top of using a corticosteroid inhaler, asthma patients generally also have a rescue inhaler. But the problem that many asthma patients face is that while these inhalers alleviate the acute symptoms of an asthma attack, they don't treat the underlying inflammation. This fails to address the risk of severe asthma exacerbations in the future, which can lead to hospitalizations or fatalities.

Fortunately, AstraZeneca could have an answer to this problem. If approved, the company's PT027 inhaler candidate would be a first-in-class rescue treatment. PT027 uses a fixed-dose combination of albuterol (a short-acting treatment to relieve symptoms) and an anti-inflammatory inhaled corticosteroid named budesonide to treat underlying lung inflammation.

Patients with moderate to severe asthma were enrolled in a phase 3 clinical trial that included a two-to-four-week screening period, a 24-week treatment period, and a two-week post-treatment period to test PT027. These patients were randomly assigned to receive either 180 micrograms (mcg) of albuterol and 160 mcg of budesonide, 180 mcg of albuterol and 80 mcg of budesonide, 180 mcg of albuterol, 160 mcg of budesonide, or placebo four times daily.

Compared to just 180 mcg of albuterol, the combination of 180 mcg of albuterol and 160 mcg of budesonide reduced the risk of severe exacerbation by 27% in adults and adolescents. This is a significant improvement over the current standard of care. 

A patient attends an appointment during the COVID-19 pandemic.

Image source: Getty Images.

An indication with meaningful sales prospects

PT027 could be a game-changing therapy for asthma patients. But what could that mean for AstraZeneca's financials?

A staggering 71 million rescue inhalers are used in the United States every year. The investment banking company Jefferies (JEF -1.31%) estimates that the U.S. rescue inhaler market is valued at $2.6 billion. The bank believes that PT027 could generate $500 million in annual sales for the pharma stock. Given the efficacy of the drug, this is arguably a reasonable sales projection. 

Stacked up against the $44.6 billion in revenue that analysts are expecting from AstraZeneca in 2022, this indication alone would be a respectable 1.1% lift in the company's revenue. 

AstraZeneca is a no-brainer buy

Even if PT027 falls short of analysts' expectations, AstraZeneca has 179 projects in its pipeline across therapeutic areas. This almost guarantees that the company won't have a difficult time launching plenty of growth products in the future. That's why analysts are anticipating AstraZeneca will deliver 15.3% annual earnings growth over the next five years. For context, this is more than double the drug-manufacturer industry average of 7%.

And yet, even with its superior growth profile, AstraZeneca's forward price-to-earnings (P/E) ratio of 19.2 isn't that much higher than the industry's average forward P/E ratio of 12.5. This makes the stock a compelling buy for investors.