What happened
Shares of Novocure (NVCR) were sinking 10.7% lower as of 11:02 a.m. ET on Monday. The decline came after Piper Sandler analyst Jason Bednar downgraded the stock to neutral from overweight. Bednar also cut the 12-month price target for Novocure to $70 from the previous target of $90.
So what
Is Bednar worried about Novocure's upcoming clinical results for its tumor-treating fields (TTFields) therapy? No. He actually expects the company will announce positive results in January from the Lunar study evaluating TTFields in treating non-small cell lung cancer.
So what's behind the Piper Sandler analyst's newfound negativity? Bednar wrote to investors that he's not enthusiastic about Novocure facing the long process of winning regulatory approvals for TTFields in the new indication, securing reimbursement, and going after a new market.
In Bednar's view, it could take a few years before TTFields will achieve success in non-small cell lung cancer. In the meantime, Novocure's revenue growth from glioblastoma treatment has slowed considerably.
This perspective isn't held by most Wall Street analysts, though. Five of the six analysts surveyed by Refinitiv rate Novocure as a buy or strong buy. The average price target for the biotech stock is $94.88 -- even higher than Bednar's previous target.
Now what
Bednar's downgrade seems to be centered solely on Novocure's revenue outlook over the next couple of years. However, investors (and especially those who focus on the biotech industry) are focused farther in the future. And they have much to look forward to with Novocure.
In addition to the Lunar study results on the way, Novocure should report data from two late-stage studies of TTFields in treating brain metastases and recurrent ovarian cancer next year. The company also expects to announce results from a late-stage study targeting pancreatic cancer in 2024.
