Jones Trading maintains Buy on ORIC, $17 target on positive data

On Monday, Jones Trading reiterated a Buy rating on ORIC Pharmaceuticals stock with a price target of $17.00, as shares traded at $11.23. The stock has shown remarkable momentum, gaining over 20% in the past week according to InvestingPro data. The firm’s analyst, Soumit Roy, highlighted the promising results from the combination of ORIC’s product with Xtandi, which demonstrated a significant progression-free survival (rPFS) benefit. The response rate based on RECIST criteria was lower compared to Phase 1 data from Pfizer (NYSE:PFE), but the PSA50 results were consistent.

ORIC Pharmaceuticals, trading on (NASDAQ:ORIC), has reported data from its ongoing clinical trials, which have shown that its drug, when combined with Erleada, has a higher PSA50 than when used alone. With a strong current ratio of 13.15 and more cash than debt on its balance sheet, the company appears well-positioned to continue its clinical development programs. The company is expected to provide updates on median progression-free survival (mPFS) and objective response rate (ORR) around mid-2025, with its next earnings report scheduled for March 25, 2025.

The safety profile for the combination of ORIC’s drug and Erleada was notably better, with the analyst expressing interest in observing any potential cumulative adverse events in the future. Jones Trading projects that ORIC’s product could reach approximately $575 million in worldwide peak sales by 2036 for metastatic castration-resistant prostate cancer (mCRPC) after Zytiga’s market presence.

During a fireside chat at Jones Trading’s virtual Precision Medicine Symposium on February 3, ORIC’s management discussed their expectations from Pfizer’s data and their strategy for their EED inhibitor in treating prostate cancer. Additionally, initial combination data of ORIC’s drug with Erleada as of December 10, 2024, showed a PSA50 of 50% and a PSA90 of 33% in refractory mCRPC patients, with one patient having a durable confirmed PSA90 response ongoing at 38 weeks.

Jones Trading’s valuation model suggests a net present value (NPV) sum of the parts (SOTP) of approximately $5 per share from ORIC’s product, assuming a probability-adjusted peak market penetration of 35% to 40%. Notably, analyst targets range from $13 to $25 per share, with a strong consensus recommendation of 1.17 (where 1 is a Strong Buy). InvestingPro subscribers can access additional insights, including 8 more ProTips and detailed financial metrics. The continued development and forthcoming data updates are anticipated to further clarify the drug’s potential market impact and benefit to patients.

In other recent news, ORIC Pharmaceuticals has been making notable strides in its ongoing clinical trials. Cantor Fitzgerald maintained an Overweight rating on ORIC, highlighting the potential of the company’s prostate cancer treatment, mevrometostat. This drug, developed in partnership with Pfizer, has drawn attention due to an accidental release of information hinting at positive developments in its efficacy for treating prostate cancer.

Cantor Fitzgerald’s analyst noted the significance of the upcoming clinical trial results for mevrometostat, suggesting a potential surge in ORIC’s stock if the results meet expectations. Citi also reaffirmed its Buy rating on ORIC, anticipating a significant increase in the company’s stock value with the expected publication of Pfizer’s late breaker abstract revealing pivotal randomized Progression-Free Survival (PFS) data.

ORIC Pharmaceuticals has also shared updates on its drug candidate ORIC-944, observing promising prostate-specific antigen (PSA) decreases and a well-tolerated safety profile. Furthermore, the company announced a new collaboration with Johnson & Johnson to evaluate another drug candidate, ORIC-114, for treating non-small cell lung cancer (NSCLC) patients with specific mutations. These recent developments mark a crucial phase for ORIC Pharmaceuticals as it progresses with its clinical trials and collaborations.

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