BofA Securities downgrades Erasca stock to Underperform on competitive concerns

Investing.com - BofA Securities downgraded Erasca Inc (NASDAQ:ERAS) from Buy to Underperform on Wednesday, slashing its price target to $1.00 from $4.00. The clinical-stage biotech company, currently valued at $445 million, trades at $1.60 per share, significantly below analysts’ average target of $11.00.

The downgrade comes as BofA Securities expressed concerns about the increasingly competitive landscape for molecular glue drugs in solid tumors, despite acknowledging that Erasca’s lead candidates ERAS-0015 and ERAS-4001 have shown solid preclinical profiles compared to key competitors.

BofA Securities cited three main factors behind its decision: the high bar for clinical differentiation in the growing molecular glue landscape, the substantial time and financial resources needed to evaluate combination therapies, and Erasca’s position several years behind competitors in the space.

The firm also noted concerns about Erasca’s melanoma drug naporafenib, stating it’s unlikely to find a partner given several months have passed since the company’s reprioritization announcement.

BofA Securities concluded that Erasca faces a "tough road ahead" with continued spending on lead programs, a lengthy timeline before potential approval, and growing challenges to gain market share.

In other recent news, Morgan Stanley downgraded Erasca Inc from Overweight to Equalweight, adjusting its price target from $4.00 to $2.00. This change follows the company’s recent progress with its investigational new drug filings for ERAS-0015 and ERAS-4001, which have received regulatory clearance. Despite the downgrade, Erasca projects its cash resources will last into the second half of 2028. The downgrade was primarily due to delayed clinical data, as noted by Morgan Stanley. These developments are crucial for investors keeping track of Erasca’s ongoing projects and financial health. The company’s ability to extend its cash runway suggests a level of financial stability amidst these changes.

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