On Wednesday, JPMorgan updated its outlook on Vir Biotechnology (NASDAQ:VIR), raising the price target to $14 from $10 while maintaining a Neutral rating. According to InvestingPro data, Vir, with a market capitalization of $1.77 billion, maintains a strong liquidity position with a current ratio of 8.94 and holds more cash than debt on its balance sheet. The adjustment follows Vir's presentation of initial clinical data for its in-house developed masked Tumor Cell Engagers (TCEs), namely anti-HER2 VIR-5818 and anti-PSMA VIR-5500.
These candidates have shown promising activity in solid tumor subsets, validating the strategic acquisition of the platform from Sanofi (NASDAQ:SNY) in September of the previous year.
The analysts highlighted the 33% objective response rate (ORR) observed with VIR-5818 in patients with HER2+ colorectal cancer (CRC), comparable to results from the phase 2 MOUNTAINEER study involving tucatinib and trastuzumab. This finding, along with the potential for higher dosing, was noted as particularly significant. Additionally, VIR-5500's safety profile was recognized for its differentiated approach to cytokine release syndrome (CRS), without the need for prophylactic steroids, which could be advantageous in maintaining tumor response.
JPMorgan's valuation model incorporates probability of success (PoS) assumptions ranging from 20-25% for VIR-5818 in HER2+ metastatic breast cancer (mBC) and metastatic CRC (25-40%), to 35% for VIR-5500 in third-line or higher metastatic castration-resistant prostate cancer (mCRPC). This supports a fair valuation of $13 to $14 per share.
The stock currently trades at an attractive Price-to-Book ratio of 0.88, though InvestingPro analysis indicates the company is quickly burning through cash with revenue declining by 33.82% over the last twelve months. The firm noted that the positive market reaction to the data, which saw Vir's stock surge by 65% compared to a flat performance in the Nasdaq Biotechnology Index (NBI), essentially reflects this valuation.
The analysts believe that for Vir's stock to maintain its upward trajectory, further evidence of safety across additional cohorts and a larger number of subjects evaluated in subsequent data readouts will be necessary. The timeline for these next steps, however, remains unspecified. For deeper insights into Vir's financial health and future prospects, including 8 additional ProTips and comprehensive valuation metrics, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, Vir Biotechnology has made significant strides in its clinical programs.
The company has presented promising results from ongoing trials for its dual-masked T-cell engagers, VIR-5818 and VIR-5500, showing favorable safety and efficacy profiles. The company's investigational drugs, tobevibart and elebsiran, have also been granted Breakthrough Therapy designation by the FDA and Priority Medicines designation by the EMA for the treatment of chronic hepatitis delta. This recognition further bolsters the company's position in the market.
TD Cowen has maintained a Buy rating on shares of Vir Biotechnology, highlighting the potential of the company's pipeline programs, particularly its treatments for hepatitis B and D. This confidence is underpinned by the promising data from the MARCH and SOLSTICE trials.
Furthermore, Vir Biotechnology's treatments for chronic hepatitis delta, tobevibart and elebsiran, have received a positive opinion for orphan drug designation from the EMA. This status could provide the company with scientific advice, fee reductions, and a decade of market exclusivity upon approval.
Lastly, Vir Biotechnology has shared encouraging results from a Phase 2 clinical trial for chronic hepatitis B treatment. The company has reported significant developments during its third-quarter 2024 earnings call, including a licensing agreement with Sanofi for three T-cell engager programs and advancements in hepatitis trials.
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