Why SVB Leerink Is Bullish On Kinnate Biopharma

Kinnate Biopharma Inc KNTE, which focuses on developing small-molecule kinase inhibitors for difficult-to-treat, genomically-defined cancers, recently raised $276 million in gross proceeds in an initial public offering priced at $20 per share.

The Kinnate Biopharma Analyst: Following the end of the IPO quiet period, SVB Leerink analyst Andrew Berens initiated coverage of Kinnate Biopharma with an Outperform rating and $52 price target.

The Kinnate Biopharma Thesis: Kinnate Biopharma's lead asset KIN002787, which targets BRAF Class II and Class III mutations, addresses a high unmet need in a number of tumor types, Berens said in a Monday initiation note.

The current BRAF inhibitors target Class I mutations, the analyst said. 

This represents over a $2-billion opportunity across melanoma, non-small cell lung cancer and colorectal cancer, he said. 

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The second asset, KIN003, is a selective and potent FGFR2/3 inhibitor that is optimized to address the gatekeeper and molecular break mutations that confer resistance to other approved FGFR inhibitors, Berens said. 

The company plans to initiate Phase 1 trials of KIN003 in cholangiocarcinoma and bladder cancer in the first half of 2022, the analyst said.

This investigational asset represents peak sales of about $985 million, he said. 

"KNTE leverages a structure-based drug discovery platform that we think will continue to generate fundamental and strategic value for the company." 

SVB Leerink said it believes Kinnate will be able to deliver meaningful catalysts over the next six to 18 months, including initial safety and potential efficacy data from Phase 1 trial for KIN002787 in BRAFm cancer and KIN003 in FGFR2/3+ cancers.

"We believe these readouts are likely to incrementally de-risk the clinical programs, while also offering an expedited regulatory pathway," Berens said. 

KNTE Price Action: Kinnate Biopharma had a strong debut on Dec. 3, closing at $39.03 compared to the $20 offer price. The stock has traded in a range of $34.14-$48.75 since then.

At last check, the shares were rallying 5.83% to $40.22.  

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