Arcus Biosciences shares reversed lower Tuesday, though analysts say enthusiasm is growing for the biotech company's experimental cancer drug, a rival to Merck's approved treatment, Welireg.
Arcus highlighted test results so far for its drug, casdatifan, in patients with a form of kidney cancer. In 121 patients, casdatifan has consistently demonstrated roughly a 50% improvement in response and durability over Welireg, Leerink Partners analyst Daina Graybosch said in a report.
She sees "significant room for upside as investors appreciated the opportunity for (casdatifan)."
"(Casdatifan) makes up $42 of our $52 price target for RCUS, and this is likely an underestimate of the drug's value, as it does not yet reflect the impressive duration of therapy more evident in this dataset with longer follow-up, or wild-card potential outside of (clear cell renal cell carcinoma)," she said.
After surging 8.5% on Monday, Arcus Biosciences stock sank 3.2%, closing at 14.02 on the stock market today. Monday's move sent Arcus stock to its highest point since February, but Tuesday's move reversed lower from premarket gains.
Arcus Biosciences Vs. Merck
The results presented Monday paint a promising picture for casdatifan compared with other studies of Merck's Welireg.
In Arcus Biosciences' testing, 31% of patients responded to casdatifan. In comparison, 19% to 23% of patients in Merck's studies responded to Welireg.
Half casdatifan recipients lived for a year before their cancer worsened — a measure known as progression-free survival. Only about a third of Welireg patients hit the same bar. Also, 43% of patients given casdatifan lived for 18 months before cancer progression, vs. 22% to 23% of Welireg patients.
Further, at the median, patients who received casdatifan lived for 12.2 months before their cancer started to worsen, compared with 5.6 months to 7.3 months for patients given Welireg.
Wedbush analyst Robert Driscoll says Arcus Biosciences' results appear "best-in-class." Notably, the company tested casdatifan in heavily pretreated patients.
For the dose Arcus plans to study in Phase 3 testing, 35% of patients responded to treatment. In total, 84% were considered to have their disease under control. An additional two responses have yet to be confirmed. If they are, 42% of the test group will have responded to casdatifan, he said in a report.
That dose also led to a 12-month progression-free survival of 60%.
"We continue to see these data as highly differentiating for casdatifan," he said.
Driscoll rates Arcus Biosciences stock an outperform with a 33 price target.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
