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The abbreviated week started with one major crisis that has been averted for the time being. Over the long weekend, an agreement was reached between President Biden and Majority Leader McCarthy that should lead to the resolution of the debt ceiling.
Oppenheimer’s Chief Investment Strategist John Stoltzfus expects a positive response to the progress being made to close the deal. “In our view, this bodes well for the US and markets, even if it does not allay fears in the near term as the deal moves toward House and Senate votes,” Stoltzfus said.
Aside from that elephant in the room, plenty of economic data will be released this week that has the potential to provide insight into the state of the economy, including nonfarm payrolls and the ISM survey of manufacturing companies. “These will give our first indication of the health of the economy in May,” notes Stoltzfus.
In the meantime, we wanted to take a closer look at two stocks that earned a round of applause from Oppenheimer, with the company’s analysts predicting more than 50% upside potential for each. We ran these tickers through the TipRanks database to get a more complete picture of their prospects. Here’s the low point.
Mirati Therapeutics (MRTX)
We start with Mirati Therapeutics, a biopharmaceutical company dedicated to developing targeted therapies for cancer patients. Based in San Diego, California, this company focuses on the development of small molecule drugs that specifically target genetic mutations associated with cancer. The approach involves identifying and inhibiting key molecular causes of cancer to disrupt tumor growth and improve patient outcomes.
The goal of every bituch is to get a drug approved and Mirati recently achieved that. Last December, the FDA granted accelerated approval for adagrasib (Krazati) as a second-line treatment for non-small cell lung cancer (NSCLC). In the drug’s first full quarter on the market (1Q23), Krazati generated sales of $6.3 million.
The drug is also being evaluated in other indications. Upcoming catalysts include a readout of updated first-line NSCLC data for the combination of adagrasib with pembrolizumab in 2H23. Mirati is also on track to complete an additional New Drug Application (sNDA) for third-line and advanced colorectal cancer by the end of the year.
Another notable catalyst on the horizon is MRTX1719, which is currently under evaluation as a treatment for methylthioadenosine phosphorylase (MTAP)-deleted cancers. First clinical data from the phase 1/2 clinical trial are expected in 2H23.
Recently, however, Mirati suffered a setback with yet another of his future treatments. Last week, the company announced that its lung cancer therapy sitravatinib, in combination with Bristol-Myers Squibb’s Opdivo, had failed to meet its primary endpoint in a phase 3 trial.
The stock fell quite a bit in the ensuing trading session, but interestingly its failure is viewed as a positive by Oppenheimer analyst Jay Olson, who upgraded his rating from Perform (i.e. Neutral) to Outperform (i.e. Buy) after the readout.
Explaining his position, Olson said: “We believe the risk/reward profile of the stock has shifted to a more favorable position. We have been on the sidelines of this story for a while as we were unsure about the clear differentiation of Krazati vs. Lumakras in the context of a widening launch gap and on the pipeline With expectations on Krazati (especially in the 1L) reset and a possible overhang of a late stage program now removed we think the stock is poised to improve perform with multiple catalysts over the next 12-18 months…”
“We believe that negative SAPPHIRE results and sitravatinib MRTX removal make a much cleaner story for potential M&A with an attractive valuation,” the analyst summarized.
Olson’s price target now stands at $56, making room for a 12-month gain of ~51%. (Click here to view Olson’s track record)
The Street’s average price target is slightly higher at $61.33, indicating a potential return of 65% for the year ahead. Overall, the analyst consensus rates this stock as a moderate buy, based on 8 buy versus 4 hold. (To see MRTX stock forecast)
Corbus Drugs (CRBP)
We’ll stay in the biotech space for our next Oppenheimer-backed name. Corbus, a microcap biopharmaceutical company, is committed to helping individuals overcome serious illnesses by introducing innovative scientific methods into established biological pathways.
In its pipeline, the company is focusing on two different approaches in oncology. One of the most significant developments is CRB-701, a clinical-stage Nectin-4 antibody drug conjugate (ADC) licensed from CSPC Pharmaceutical Group. A phase 1 dose-escalation study is currently underway in China, evaluating patients with advanced solid tumors. Corbus plans to use the data from this phase 1 trial to support a US clinical trial, which is expected to start in mid-2024.
The company is also developing CRB-601, a potent and selective anti-αvβ8 integrin monoclonal antibody intended to block the activation of latent TGFβ in the tumor microenvironment (TME). Corbus is on track to file an IND (investigational new drug) for CRB-601 in the second half of the year. Enrollment in a Phase 1 trial is expected to begin in late 2023.
While the pipeline is still in its infancy, CRB-701’s potential is driving Oppenheimer analyst Jeff Jones’ optimistic outlook.
“We see that ‘701 has the potential for a best-in-class profile compared to SGEN’s PADCEV. ‘701 has the potential for superior safety and tolerability, due in part to patented linker technology. CRBP’s plan to use a CDx to identify patients and tumors with elevated Nectin-4 expression supports broad applicability and potentially reduces clinical risk,” Jones opined.
Jones has high expectations indeed. Along with an Outperform rating (i.e. Buy), his $22 price target implies that the stock will rise 148% over the course of a year. (Click here to view Jones’ track record)
Microcap pharma stocks don’t always get a lot of analyst attention – they often fly under the radar. However, there are two analyst ratings here and both are to buy, making the consensus rating a moderate buy. CRBP shares are priced at 8.87, with an average price target of $12.50, indicating an upside of ~41%. (To see CRBP inventory forecast)
To find great ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ stock insights.
Disclaimer: The opinions expressed in this article are solely those of the recommended analysts. The content is for informational purposes only. It is very important to do your own analysis before making an investment.
