RHHBY - As FDA mulls fate of Amgen drug Sanofi could snap up rival Mirati

2023-10-08 15:18:00 ET

As the FDA continues to mull the fate of Amgen's lung cancer drug Lumakras, Sanofi is reportedly moving in on Mirati ( NASDAQ: MRTX ), which has developed a rival product called Krazati.

Analysts appear to be divided on whether the FDA will end up denying full approval for Lumakras, a move that would likely enhance Mirati's attractiveness as a takeout target.

Amgen’s quest to convert an accelerated approval for its KRAS inhibitor Lumakras to a full approval became more complicated this past week when an FDA advisory committee voted that results from a key Phase 3 study were unreliable due in part to certain systemic biases.

Lumakras received accelerated approval for the treatment of non-small cell lung cancer, or NSCLC, with KRAS G12C mutations in 2021, but needed more supporting data to receive full approval. The FDA is expected to make a decision by the end of December.

Mirati shares soared 45% Thursday following the FDA vote, which happened to coincide with a Bloomberg report that said Sanofi was eyeing a takeover of the oncology drugmaker. Mirati’s KRAS drug Krazati received FDA accelerated approval for NSCLC with G12C mutations in December. Mirati is expected to release additional Phase 3 data on Krazati later this month.

“While not confirmed, shares now reflect a potential takeout premium,” wrote BMO analysts on Friday, raising their price target for Mirati to $72 from $31. The stock closed at $60.20 on Friday.

BMO also increased its peak market penetration estimate for Krazati to 30% as a second-line treatment for G12C NSCLC patients to reflect the possibility that Lumakras won't receive full approval.

Leerink was even more bullish on Lumakras getting bumped off the market.

In a note released Friday, Leerink noted that a key FDA official at the meeting “injected commentary suggesting to us that the agency may be considering withdrawal of Lumakras, which would leave Mirati’s Krazati as the only drug with approval in the second-line setting. We think this could be a blockbuster opportunity worldwide.”

But other analysts expect Lumakras to remain on the market as a second-line treatment.

RBC Capital Markets, which covers Amgen, noted on Friday that the committee emphasized Thursday’s vote was not a vote to withdraw Lumakras and that there were “other regulatory pathways to convert Lumakras to full approval.” RBC said they saw potential for Lumakras as a first-line treatment with chemotherapy, which is a larger addressable market.

Jefferies said that while it didn’t see Lumakras getting pulled off the market, a delay in Lumakras receiving full approval “could lead to a faster Krazati commercial ramp.”

As for takeout speculation, Jefferies noted that Sanofi has been active on the M&A and collaboration front of late, pointing to its recent deal with Teva ( TEVA ) for TEV574, a potential treatment for inflammatory bowel disease.

Jefferies ruled out Novartis ( NVS ), Roche ( OTCQX:RHHBY ), Eli Lilly ( LLY ) and Merck ( MRK ) as potential suitors for Mirati as they already had KRAS G12C candidates.

More on Amgen/Mirati

• FDA panel finds results from key Amgen Lumakras study unreliable

• Mirati Therapeutics soars on report of Sanofi takeover interest

• Confirmatory Trial Trouble In KRAS

• Mirati stock up 9% amid FDA meeting on rival Amgen drug (update)

• Jones Research sees Amgen FDA issues reading through to Mirati

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