Needham initiated coverage on cancer-focused biotech Mirati Therapeutics (NASDAQ:MRTX) on Wednesday with a Hold recommendation citing uncertainty over near-term upside despite the recent selloff in company shares.
Mirati (MRTX) shares sold off last week as Wall Street reacted to Phase 2 data for KRASG12C inhibitor adagrasib in combination with Merck’s (MRK) blockbuster anti-PD-1 immunotherapy Keytruda as a first-line treatment for non-small cell lung cancer (NSCLC).
Favorably differentiated from rival KRASG12C inhibitor Lumakras from Amgen (AMGN), adagrasib, which the FDA approved on Monday, can be a preferred option to treat second-line NSCLC in the medium term, the analysts led by Ami Fadia argued.
While the slow rollout of Lumakras has softened the expectations for the adagrasib launch, analysts think that current consensus estimates for the therapy are reasonable.
They also note that the current selloff indicates one of the few times Mirati (MRTX) has dropped below $50 over the past three years. However, “we expect it to be range-bound for the foreseeable future with uncertainty in 1L NSCLC, limited upside to expectations in 2L and a lack of significant near-term catalysts,” the analysts added.
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