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On Wednesday, Needham raised the price target on shares of Day One Biopharmaceuticals (NASDAQ:DAWN) to $33 from $32, maintaining a Buy rating. The adjustment follows a recent survey and updated market model for Ojemda, the company's treatment for pediatric low-grade glioma (pLGG). The survey of physicians revealed an expected increase in the use of Ojemda among their patients, which has informed the revised revenue estimates for the drug.
The survey indicated that Ojemda is currently prescribed by physicians for approximately 20% of their pLGG patients, with expectations to increase usage to about 30% within the next 6 to 12 months. In the long term, physicians anticipate that Ojemda could be used in roughly 60% of pLGG cases.
Moreover, the treatment duration with Ojemda is expected to last around two years before a drug holiday is considered. Physicians also expect to administer Ojemda in second-line treatments and beyond, with 2 to 4 treatment cycles before patients reach their mid-20s.
Based on these findings, Needham has revised upward their third-quarter 2024 revenue projections for Ojemda to $16.2 million, which is 30% higher than the consensus estimates. Similarly, the full-year revenue forecast for 2024 has been increased to $48.2 million, again surpassing consensus estimates by 30%. The firm's confidence in Ojemda's growth potential is reflected in their expectation for the drug to generate over $1 billion in revenue by 2030 for first and second-line pLGG treatment.
The stock price target increase to $33 reflects the firm's positive outlook on the future performance of Ojemda, based on the anticipated adoption and treatment patterns among physicians. This optimistic forecast for Day One Biopharmaceuticals' leading treatment aligns with the company's strategy to expand its presence in the pLGG market.
In other recent news, Day One Biopharmaceuticals has reported significant revenue from the initial sales of Ojemda, with figures reaching $8.2 million, surpassing consensus estimates. The strong sales are due to substantial patient demand, with 157 patients receiving the drug, and favorable insurance coverage decisions. Goldman Sachs reaffirmed its Buy rating and $45.00 price target for the company, noting the early success of Ojemda's market introduction.
The company also recently acquired DAY301, a promising PTK7-targeting antibody-drug conjugate for solid tumors, adding potential growth for the company. Moreover, Day One Biopharmaceuticals secured approximately $175 million in an oversubscribed private placement, with the funds set to be used for enhancing commercial capabilities, research, and potential strategic acquisitions.
In terms of clinical developments, Day One updated its FIREFLY-2 Phase 3 clinical trial, which evaluates tovorafenib as a first-line therapy for pediatric low-grade glioma. Piper Sandler reaffirmed its Overweight rating on the company, citing strong early utilization of Ojemda. However, H.C. Wainwright adjusted the price target for Day One Biopharmaceuticals, reducing it to $40.00 but maintained a Buy rating. These are recent developments for Day One Biopharmaceuticals.
InvestingPro Insights
To complement Needham's optimistic outlook on Day One Biopharmaceuticals (NASDAQ:DAWN), recent data from InvestingPro provides additional context for investors. The company's impressive gross profit margin of 91.37% for the last twelve months as of Q2 2023 aligns with the potential profitability of Ojemda, their flagship treatment for pediatric low-grade glioma. This high margin suggests that if Ojemda achieves the projected revenue growth, it could significantly boost the company's financial performance.
However, it's important to note that DAWN is currently not profitable, with an operating income margin of -3509.88% for the same period. This reflects the typical profile of a biopharmaceutical company investing heavily in research and development. An InvestingPro Tip highlights that analysts do not anticipate the company will be profitable this year, which is consistent with the current financial metrics.
On a positive note, another InvestingPro Tip indicates that DAWN holds more cash than debt on its balance sheet, providing financial flexibility as they work towards commercializing Ojemda. This solid financial position could be crucial for supporting the anticipated market expansion and adoption of their treatment.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for DAWN, providing a deeper understanding of the company's financial health and market position.
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