Market Overview

Leerink: Armo Biosciences' 'Promising' Data Justifies A Bullish Stance

Leerink: Armo Biosciences' 'Promising' Data Justifies A Bullish Stance
The Week Ahead: FANG Earnings Continue, Fox Vote On Disney Deal, More IPOs
The Week Ahead In Biotech: ASCO Presentations Dominate The Headlines

ARMO Biosciences Inc (NASDAQ: ARMO)'s lead product candidate AM0010 is a drug for the treatment of pancreatic ductal adenocarcinoma recently showed "promising" data that's supportive of a potentially large commercial opportunity, according to Leerink.

The Analyst

Leerink's Jonathan Chang assumed coverage of Armo Biosciences' stock with an Outperform rating and $50 price target.

The Thesis

Armo's lead product candidate is also its "main value driver," Chang said in the Tuesday report. AM0010 has shown "very promising" clinical results in a Phase 1 study and could eventually address a large commercial opportunity, the analyst said. 

AM0010 has been evaluated as a single agent or in combination with chemotherapy or a checkpoint inhibitor among 350 patients and 15 tumor types, Chang said. The data so far has shown that AM0010 has single-agent activity in some patients, including in renal cell carcinoma, while a combination with CPIs show higher activity versus agents along, according to Leerink.

"Key opinion leaders" the analyst spoke with were "encouraged" by the data results released so far, Chang said. 

Armo's SEQUOIA study of AM0010 plus FOLFOX versus FOLFOX alone was recommended by the Data Monitoring Committee to continue without any modifications, the analyst said.

Armo is proceeding with a randomized study among 178 patients that could be the basis for a Biologics License Application in the coming years, Chang said. 

Leerink's $50 price target is based on a 50-50 blend of a discounted cash flow analysis and revenue multiple analysis and assumes the following:

  • A 50-percent probability of success for AM0010 in pancreatic cancer.
  • A 35-percent probability of success in non-small cell lung cancer.
  • A 30-percent probability of success for renal cell carcinoma.
  • Royalties of 20 percent on all ex-U.S. sales from a future partnership.
  • A 15-percent discount rate and zero terminal growth.

Price Action

Shares of Armo Biosciences were trading slightly lower at the time of publication at $39.95. 

Related Links:

ARMO Biosciences Has 'Potential Blockbuster' Cancer Drug In Pipeline, BMO Says

Benzinga's Top Upgrades, Downgrades For March 27, 2018

Latest Ratings for ARMO

Jun 2018JefferiesDowngradesBuyHold
May 2018BMO CapitalDowngradesOutperformMarket Perform
May 2018BairdDowngradesOutperformNeutral

View More Analyst Ratings for ARMO
View the Latest Analyst Ratings

Posted-In: AM0010 cancerAnalyst Color Biotech Price Target Initiation Analyst Ratings General Best of Benzinga


Related Articles (ARMO)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

30 Stocks Moving In Tuesday's Mid-Day Session

Pet Therapeutic Entyce Can Drive Aratana Higher, Stifel Says In Upgrade