Buy Sierra Oncology Ahead Of A 2018 Full Of Catalysts

As such, Jefferies upgraded shares of the company from Hold to Buy and lifted its price target from $1.50 to $5.

At the time of writing, shares of Sierra Oncology were jumping 9.76 percent to $1.80.

Analyst Maury Raycroft noted that Sierra Oncology is rapidly advancing SRA737 through dose-escalation in two clinical studies.

SRA737 is a potent, highly selective, orally available, small molecule inhibitor of Checkpoint kinase 1, which is being investigated in two phase 1 clinical trials in patients with advanced cancer.

The analyst believes the market opportunity will continue to evolve and grow along with increased genetic testing and understanding, with potential for ‘737 success in several tumor-agnostic indications.

The analyst noted that the company is running two trials, one assessing ‘737 as a monotherapy and another with ‘737+ low-dose gem. In mono settings, the analyst noted that ‘737 can follow a similar path as PARPs and may be used in points with DNA repair mutations.

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Meanwhile, in combo study, the analyst said the company is using a biology-driven design, where a low dose is used to induce replication stress, increasing cancer cell reliance on Chk1.

Additionally, the analyst said pharma enthusiasm and data validate Chk1 inhibition as a clinically-relevant mechanism of action. Also, SRA737 safety update at ASCO'17 de-risks further, the analyst added.

Among the upcoming catalysts are:

• ‘737 data due in Feb 2018 and the second-half of 2018.
• Updates throughout the next 12-18 months for competitor Chk1s such as Eli Lilly and Co LLY's prexasertib and Array Biopharma Inc ARRY's GDC-0575.
• Pre-clinical Chk1 abstracts, supporting the company's strategy, such as SRA737+low-dose gem abstract and a prexasertib one on Chk1 PD-L1 regulation.

"Importantly, we believe SRRA's clinical strategy is differentiated and innovative — a smarter strategy — selecting for pts w/ specific genetic driver mutations that may make them most likely to respond to '737," Jefferies added.

"We would buy ahead of 1Q18 data."