What happened
Shares of the clinical-stage oncology company Mirati Therapeutics (MRTX) are under heavy pressure today following the U.S. Food and Drug Administration's acceptance of its New Drug Application for adagrasib as a treatment for patients with non-small cell lung cancer harboring the KRAS-G12C mutation. The biopharma's stock is down by a noteworthy 14.7% as of 12:22 p.m. ET on Wednesday.
Normally, the FDA accepting a company's New Drug Application for a key value driver would be a positive catalyst. In this case, however, investors aren't pleased with the FDA's target action date of Dec. 14, 2022.
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So what
Wall Street was expecting the FDA to green light adagrasib sometime in the second quarter of 2022. After all, the agency was supposed to review the drug on an accelerated timeline. The big deal is that Amgen's (AMGN -0.50%) rival cancer drug Lumakras is already on the market. Lumakras, in turn, could become an entrenched competitor by the time adagrasib gets approved.
That being said, the FDA did approve Amgen's lung cancer drug three months ahead of schedule last year. So a similar scenario could play out for Mirati's adagrasib.
What's important to understand is that the FDA is dealing with the fallout from COVID-19 right now. As such, this unexpectedly lengthy review timeline might be nothing more than the agency's way of ensuring that it doesn't miss yet another deadline. Therefore, investors probably shouldn't view this initial target action date as set in stone. The agency could very well marshal the resources to get this important new cancer drug reviewed and subsequently approved well ahead of the stated timeline.
Now what
Is Mirati's stock a buy on this pullback? Yes. Adagrasib's clinical profile suggests that it might be a superior option for many patients. In turn, Mirati ought to be able to chip away at Lumakras' first-mover advantage. Moreover, Mirati stands out as a top buyout candidate, thanks to adagrasib's blockbuster sales potential. So, all things considered, this clinical-stage biotech stock comes across as a downright bargain in the wake of this double-digit downturn.
