Mirati Dives As Short Seller Says Key Pipeline Assets Doomed

Mirati Therapeutics Inc (NASDAQ: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. (NASDAQ: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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