Mirati Therapeutics said almost half of patients responded to its lung cancer regimen, but MRTX stock crashed Tuesday as investors questioned whether it could take on traditional chemotherapy.
The biotech company tested its drug, adagrasib, in combination with Merck's Keytruda in patients with non small-cell lung cancer. Across all patients, 49% responded. In comparison, the standard combo of Keytruda plus chemo leads to a 48% overall response rate, SVB Securities analyst Andrew Berens said in a report to clients.
"Ultimately, we think the data will continue to fuel speculation on whether (adagrasib) can successfully achieve a place in the (previously untreated) treatment paradigm commercially," he said.
On today's stock market, MRTX stock plummeted 22.9% to 71.52.
MRTX Stock: Blocking KRAS Protein
Mirati's adagrasib works by blocking a mutated form of the KRAS protein. The mutation is known as G12C. The KRAS protein is notably tied to lung, colon and pancreatic cancers. If approved, it would rival Amgen's Lumakras. Earlier this year, Amgen said Lumakras plus Keytruda helped 29% of lung cancer patients, but the combination came with side effects in the liver. Amgen says it's still testing the regimen.
Among 53 patients who had at least one scan following treatment, 49% responded. Another six patients showed a response after a second scan.
The company also provided data for seven patients who began treatment an average of 19.3 months ago. That group had a response rate of 57%. They continued to respond to the regimen for over nine months. Of that group, two are still receiving treatment and are still responding after 18 months.
Berens kept his outperform rating on MRTX stock.
He noted the regimen appeared relatively safe. That question tends to be tricky for combination approaches when one drug might complicate another, leading to unintended side effects — a problem faced by the Lumakras/Keytruda regimen. In Mirati's study, most of the side effects were mild to moderate. Just 4% of patients had serious side effects.
"We think the combination appears viable in the (previously untreated) setting from a safety/tolerability perspective, although the (effectiveness) appears modest at this juncture," Berens said.
He sees peak sales of $1.7 billion for adagrasib in previously untreated patients. This is tied to about 23 per share of MRTX stock.
Mirati Stock Is Highly Rated
The news sent MRTX stock into a steep dive. Shares recently broke out of a cup base with a buy point at 95.79, according to MarketSmith.com. But shares have already triggered a sell rule. Investors should cut their losses when a stock falls 7%-8% below its entry.
Still, MRTX stock has a strong Relative Strength Rating of 95, according to IBD Digital. This puts shares in the top 5% of all stocks when it comes to 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
