Roche accidentally published positive interim results from a lung cancer treatment study on Wednesday, and helped boost not only Roche stock, but shares of smaller rivals Iteos Therapeutics and Arcus Biosciences.
All three companies are working on treatments that block TIGIT, a receptor in the body with ties to several cancer types. Roche is testing its TIGIT blocker, tiragolumab, on top of its well established immuno-oncology drug, Tecentriq. At the median, patients who received the combination lived for 22.9 months vs. just 16.7 months for Tecentriq recipients.
The news invigorated the anti-TIGIT space. Roche stock jumped 4.3% to 37.30 on today's stock market. But smaller biotech companies Iteos and Arcus got bigger boosts. Iteos shares surged 14.9%, paring back bigger gains and closing at 13.50. Arcus stock soared 22.4% to end the regular session at 23.03.
Gilead Sciences, Merck and BeiGene are also working in this arena. Gilead shares rose 0.9% to 77.04. Merck stock popped 3.8%, ending the regular session at 111.30. BeiGene stock jumped 4.4% to 202.80.
Analysts quickly tried to parse out whether the final results — expected in late 2023 or early 2024 — will be statistically significant. Roche had previously disappointed investors with its anti-TIGIT approach and sentiment had soured on the drug class recently. Leerink analyst Daina Graybosch says debating the eventual statistical outcome is fair. But there's a bigger picture to keep in mind, she says.
"The results are clinically validating for TIGIT and developers of the immuno-oncology target and, as such, the surrounding narrative should increasingly shift toward how the various TIGIT players will competitively stand out," she said in a note to clients.
Roche Stock Gaps Higher
Roche stock gapped higher on the news, rising within a flat base with a buy point at 40.48, according to MarketSmith.com.
Patients received either the combination or Tecentriq alone for almost 16 months. Patients who received the combination lived a median 6.2 months longer than those given Tecentriq alone.
For smaller companies Arcus and Iteos, the news is validating for the TIGIT approach. Gilead and Merck are also working on combinations using immuno-oncology drugs. But Merck has the edge here, Wedbush analyst David Nierengarten said in his note to clients. Merck's immuno-oncology drug, Keytruda, is the standard treatment for non-small cell lung cancer.
The results might not be strong enough "to replace (Keytruda) in practice," Nierengarten said.
Gilead is testing an anti-TIGIT approach with Arcus. Its experimental immuno-oncology drug uses the same approach as Roche's Tecentriq and Merck's Keytruda. But it doesn't appear to be as potent.
"It also does highlight that Gilead remains years behind competitor Roche — and potentially with an interior doublet given questions around (its immuno-oncology drug's) activity," RBC Capital Markets analyst Brian Abrahams said in a note.
He has a neutral rating and 84 price target on Gilead stock and didn't list a rating for Roche stock.
Statistically Significant Results?
Bullishly for Roche stock, the combination seems to improve with time.
"This bodes well for maintained clinical benefit, even if not statistical significance," Leerink's Graybosch said. If Roche's study doesn't eventually show statistically significant results, poor study design could be the culprit, she added.
She notes Roche is also testing an anti-TIGIT approach in cervical cancer. BeiGene also has a triple-drug combination in liver, esophageal and cervical cancers. BeiGene could report its results in October.
Follow Allison Gatlin on X, formerly known as Twitter, at @IBD_AGatlin.
