What happened
Shares of Mirati Therapeutics (MRTX), a clinical-stage biotech developing new cancer drugs, surged 55.8% in January, according to data from S&P Global Market Intelligence. Plans to advance its sitravatinib into a pivotal study with Opdivo from Bristol-Myers Squibb (BMY -7.57%) gave investors a reason to cheer.
So what
Keytruda, a PD-1 inhibitor that makes it hard for tumors to shut down attacks from the immune system, is already a standard first-line treatment for non-small cell lung cancer (NSCLC). It doesn't work every time, though, and a lot of PD-1 refractory patients in the second-line setting need new treatment options.
Mirati shares rose in January after the company announced a collaboration with Bristol-Myers that involves a free supply of its PD-1 inhibitor Opdivo to use in clinical trials, but no financial assistance. Investors are increasingly hopeful Mirati's lead candidate, sitravatinib plus Opdivo, will become a new option for second-line NSCLC patients.
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In October, Mirati showed results from an ongoing phase 2 study with NSCLC patients that relapse after their first PD-1 treatment that turned some heads. A surprising 20% had confirmed tumor responses, which is much more than you'd expect from standard care.
Mirati will start a pivotal study in the first half of the year comparing Opdivo plus sitravatinib to standard chemo for a similar patient group. Mirati thinks the FDA will be willing to grant accelerated approval based on improved response rates then use long-term survival data from the same study to grant a full approval down the road.
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Now what
As part of a popular second-line NSCLC therapy, annual sitravatinib sales could top $1 billion within a few years, but investors shouldn't get too excited yet. In January, the company was still presenting initial phase 2 data from an Aug. 21, 2018, data cutoff. It might be a good idea to wait for further results from the ongoing study before taking a chance on Mirati.
Footing the entire bill for a phase 3 trial with sitravatinib won't be cheap, but Mirati has enough cash to take the company through a response rate assessment that could support an approval. The company finished September with $243 million in cash, and in January, it raised another $115 million through a secondary offering that boosted the outstanding share count around 6.4% higher.
