* Standalone strategy hinges on new drugs delivering
* AstraZeneca has had more than fair share of flops in past
* Experiences with Exanta, other failures haunt company
LONDON, May 20 (Reuters) - AstraZeneca's confidence in its promising new drugs may have seen off Pfizer's $118 billion takeover bid for now, but investors are left contemplating the lessons from 2004, when it was also trumpeting its product pipeline.
AstraZeneca became renowned a decade ago for talking up the prospects for its new treatments under former chief executive Tom McKillop, only to see key experimental medicines tumble like ninepins in a series of development setbacks.
By the time McKillop left in 2006 to chair the ill-fated Royal Bank of Scotland, its new drug pipeline was fractured and AstraZeneca had a reputation for dismal research productivity that it has only recently started to shake off.
The biggest pipeline wipe-out came in 2004 when Exanta, which could have been the first of a new class of oral anticoagulants to reach the market, was deemed too dangerous by U.S. experts.
Since then AstraZeneca has continued to have more than its fair share of late-stage drug failures, including products for diabetes, stroke, depression and rheumatoid arthritis, all of which were once seen as potential multibillion-dollar sellers.
That track record has not been forgotten by investors who remain skeptical about the claims for a line-up of life-saving new treatments that have featured prominently in the battle to win hearts and minds in recent weeks.
In its fightback against Pfizer, AstraZeneca's current CEO Pascal Soriot made bullish pipeline projections a central plank of his defense, predicting a 75 percent increase in annual sales to $45 billion by 2023.
AstraZeneca Chairman Leif Johansson told Reuters on Monday that his firm was now "the most transparent pharmaceutical company in the whole world", following its decision to publish its 10-year planning forecasts on May 6.
The challenge for Soriot and Johansson is to make good on that promise.
"The problem with putting big sales numbers out there is you have to live up to them. If anyone believes the industry has suddenly become less risky, they are misguided," said Mark Clark, an analyst at Deutsche Bank.
"It is not just the risk of your own product, there is also fast-follower risk these days, because rival companies are increasingly hot on the heels of a new idea."
There is a good reason why, in normal times, drugmakers like to keep much of their early research under wraps, since they are fearful that promising too much simply sets them up for a fall, as AstraZeneca found out a decade ago.
While investors agree AstraZeneca has some promising new drugs, especially for cancer, they view the 2023 forecasts as highly speculative and no sure bet to propel the shares to Pfizer's 55 pounds-per-share offer level.
The valuation gap between AstraZeneca's current share price and Pfizer's offer is currently more than $25 billion.
"I do not know whether AstraZeneca will hit their 2023 sales target, but I do know that 2023 is a long way off, and such success is far from certain," said one top-10 shareholder.
Some of AstraZeneca's biggest sales projections are for its new immunotherapy drugs for cancer, such as MEDI4736, which it believes could achieve peak sales of $6.5 billion a year.
But AstraZeneca is lagging rivals such as Bristol-Myers Squibb, Merck & Co and Roche in the field of tapping the immune system to fight cancer, and its attempts to catch up hinge critically on the power of clinical trial results.
Some of that data will be presented at an American Society of Clinical Oncology (ASCO) conference on May 30-June 3.
"They've clearly implied there's going to be very positive data, and it had better look bloody good," said one top-30 investor.
Converting promising early research into winning commercial products is a growing challenge for drugmakers, reflecting both increasing scientific competition in hot areas like oncology but also the high hurdle set by governments and insurers in paying for expensive new drugs.
That is equally true in other areas where AstraZeneca has flagged promising pipeline assets, such as respiratory drugs, where it is up against powerful players like GlaxoSmithKline that have their own products in development.
Some analysts, like Citi's Andrew Baum, reckon AstraZeneca does have a truly impressive pipeline, though even his 49 pounds-a-share valuation for the shares on a standalone basis remains short of the 55 pounds offered by Pfizer.
Bernstein analyst Tim Anderson is more cautious, writing in a note that AstraZeneca's "track record in R&D is not exactly a shining star, and this may have at least some predictive value".
That view may resonate with the fund manager who commented back in 2004: "AstraZeneca looked like it had a great pipeline, but suddenly it doesn't look quite as good any more."
(Additional reporting by Chris Vellacott; Editing by Will Waterman)