Mirati Therapeutics Inc MRTX shares were seeing weakness Tuesday after short seller Kerrisdale Capital released a bleak report concerning its two investigational assets.
Mirati's lead cancer drug candidate sitravatinib, a multi-kinase inhibitor, has not lived up to its promise, according to Kerrisdale.
All of its prospects for single-agent potential have evaporated, and the combo studies looking like more of a diversion attempt rather than a legitimate therapeutic candidate with a scientific rationale, the short seller said in the report.
It was the promise held out by sitravatinib that propelled Mirati to become a $1-billion biotech, according to Kerrisdale.
Kerrisdale said this leaves Mirati relying on its KRAS inhibitor MRTX-849 to defend its multibillion-dollar valuation. The total addressable market opportunity of $7 billion touted by Mirati is "laughable," according to the short seller.
Benzinga has contacted Mirati for comment on the short report.
Short Seller Says Mirati Has 'Single Dead-End Compound'
A combo treatment approach along with a checkpoint inhibitor presents a remote chance of MRTX-849 being approved for a first-line setting, but the odds of that happening are close to "zero," according to the short report.
In second-line setting, the TAM opportunity is merely $600 million-$800 million, according to Kerrisdale.
The firm is of the view that even if MRTX-849 is approved for this indication in the future, Mirati's market share wouldn't be very high, given the likelihood of Amgen, Inc. AMGN dominating due to its financial and marketing muscle and first-mover advantage.
"Mirati's opportunity set is therefore best described as an extremely low-percentage chance of attaining a low-percentage share of a $600-800 million market circa 2025," Kerrisdale said in the report.
That's only a fraction of Mirati's $4.6 billion market-cap.
"Investors who have gambled on the M&A prospects of what amounts to a single dead-end compound will soon find out they're on the wrong path," the short report said.
At last check, Mirati shares were sliding 8.24% to $87.52.
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