Mirati Therapeutics Shares Plunge 40% After Jefferies Downgrade

Shares of Mirati Therapeutics, Inc.

fell more than 40 percent and touched a new 52-week low after Jefferies downgraded the stock to Hold from Buy following not-so-impressive clinical data. "We believe accumulating data from MRTX and others at ASCO disclosed this weekend continues to validate the scientific approach of targeted TKIs like 265 and 516 in gene-altered cancers," analyst Brian Abrahams wrote in a note. However, the analyst sees increased risk in gaining meaningful market share in long-term given lower overall response rates (ORR) for lead drug 265 (glesatinib) and GI toxicity necessitating reformulation. With 4 additional evaluable phase II criteria-fulfilling Met/Axl-altered non-small cell lung cancer patients, the company reported a 3/11 partial response rate, lower than the 2/4 previously reported and with no responses amongst the other phase Ib patients. "While we are cautious against over-interpreting small numbers, given the competitive landscape-- particularly crizotinib's entrenchment (and potential for higher responses)--we had hoped for more robust signals with this highly-selected population," Abrahams highlighted. In this context, the analyst said he would wait to add to positions pending further clarity on its potential role. "We are reducing probability of success for '265 to 30% to reflect increased developmental risk, lowering the end-opportunity to account for the need for more data to support its potential use ahead of competitors (est. 2025 WW sales of $570M, still a role for the agent, vs. $645M prior),and pushing timelines out slightly," Abrahams noted. The analyst also slashed the price target to $17 from $27. Shares of Mirati touched a new 52-week low of $10.50 and were currently down 40.93 percent to $10.84.