How Does Mirati's Lung Cancer Candidate Stack Up Against Amgen's?

Mirati Therapeutics Inc MRTX's shares have been on a tear, advancing over 50 percent since Amgen, Inc. AMGN uploaded an online abstract of its non-small cell lung cancer candidate May 15 to be presented at the ASCO 2019 annual meeting.

An analyst at Citigroup looked into why Mirati's NSCLC candidate has the potential to outdo Amgen's.

The Analyst

Yigal Nochomovitz upgraded Mirati from Neutral to Buy and increased the price target from $76 to $132.

The Thesis

Mirati's KRAS G12 inhibitor MRTX849 has the potential to exceed the 50-percent overall response rate of Amgen's AMG 510, Nochomovitz said in a Monday note. (See his track record here.)

The analyst based his opinion on three factors: 

• An expected longer half-life of 20-30 hours vs. AMG 510'S 6.5 hours.
• Pre-clinical data suggesting better penetration of MRTX849 into tumor tissue.
• Deeper responses in pre-clinical models.

We believe that continuous coverage of the KRAS G12C target based on a longer halflife will better limit downstream re-activation of the KRAS pathway ... and see commentary around possible intermittent dosing for KRAS G12C as speculative," the analyst said. 

Citi raised its probability of success estimate for MRTX849 in NSCLC to 75 percent.

Mirati is set to explore MRTX849 with the EGFR inhibitor afatinib for colorectal cancer, and the Nochomovitz said this makes sense biologically due to prior studies that demonstrated a higher ORR for the combo treatment versus a monotherapy.

Mirati expects a similar number of patents in the second half of 2019 as AMG 510, but a higher prior proportion with NSCLC, the analyst said. 

The Price Action

Mirati shares trading higher by 6.5 percent to $95 at the time of publication Tuesday, following up on Monday's 31.58-percent rally.

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