Mirati: Not Looking Good In 2022, But Stronger Prospects In 2-3 Years

Summary

  • Mirati will probably not get accelerated approval for adagrasib in 2nd line NSCLC.
  • This will delay their program for two years.
  • However, much of their data is stronger than Amgen's lumakras.
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Mirati Therapeutics, Inc. (NASDAQ:MRTX) has major updates. Last month, it presented pooled and CNS data from the registration-enabling Phase 2 cohort of KRYSTAL-1 study in 116 patients with non-small cell lung cancer (NSCLC) who have received at least one prior systemic therapy.

Data showed the following:

  • As of October 15, 2021, 116 patients were enrolled and treated in the study. Of the patients enrolled, 98% had prior treatment with a PD-1/L1 inhibitor following or in combination with chemotherapy. Median follow up was 12.9 months.

  • Of the patients evaluable for response (n=112), initial results showed that the objective response rate (ORR) by Blinded Independent Central Review (BICR) was 43%, the disease control rate (DCR) was 80%, the median duration of response (DOR) was 8.5 months (95% confidence interval [CI]: 6.2 - 13.8), and the median progression-free survival (PFS) was 6.5 months (95% CI: 4.7 - 8.4).

  • With a January 15, 2022, data cutoff, the median overall survival (OS) was 12.6 months (95% CI: 9.2 - 19.2).

  • The safety profile of adagrasib in this study was consistent with prior reports and no new safety signals were observed. The most frequent treatment related adverse events (TRAEs) included gastrointestinal events and fatigue. The majority of TRAEs were Grade 1-2 (53%) with Grade 3-4 TRAEs observed in 43% of patients. Two Grade 5 TRAEs were observed. TRAEs led to discontinuation of therapy in only 7% of patients.

The ORR has hovered over this range consistently. A new addition is BICR data, which Amgen (AMGN) also has. But BICR doesn't change the data much. Median DOR is here 8.5 months versus the 11.1 months we saw in lumakras, and this is one area where lumakras forges ahead of adagrasib in NSCLC. However, Mirati says minor changes in patient numbers can swell DOR; and there is considerable overlap in confidence intervals. However, they still need to convince the market.

This data was no different from all the data they announced earlier. Adagrasib's ORR is slightly higher than what we have seen in Amgen's lumakras in NSCLC, its duration of response is a little lower, its safety profile is marginally inferior, however there are four aspects of adagrasib the investing public seem to be missing. These are, one, adagrasib penetrates the brain so it works in patients with brain metastasis (32% ORR was seen in a late-breaker at ASCO), two, it works in patients with STK11 co-mutations along with KRAS, which comprise approximately 30% of KRASG12C mutant NSCLC. Three, it has demonstrated a strong profile in combination with other drugs, and saw a 60% reduction in the tumor volume of a heavily pre-treated NSCLC patient who received MRTX849 and Novartis' experimental SHP-2 inhibitor TNO-155; and four, adagrasib may be comparable to lumakras in NSCLC, but in colorectal cancer, it is without competition.

I have discussed each of these points in earlier articles, so there's no reason to cover them here. You can find my Mirati coverage here. It should suffice to say that Mirati is in no way putting its best foot forward when it is targeting 2nd line NSCLC as its first effort at approval.

To be noted here is that Mirati is actively pursuing adagrasib in the frontline setting in NSCLC in combination with keytruda. This is going to be the key revenue generator in the NSCLC indication in future, assuming it is successful. Early data is very positive, though; data from the phase 2 Krystal-7 trial, which combines adagrasib with Keytruda in first-line NSCLC, saw a 77% ORR in patients with ≥50% PD-L1 expression. Phase 3 pivotal data should be available next year, making this the lead indication.

One point of concern, which I mentioned earlier as well, is that Amgen is planning to announce confirmatory data for lumakras at the end of 2022. This data will have a catalytic effect on the adagrasib PDUFA. If the data is good, the stock will fall, if it is bad, MRTX will gain; if the data is delayed beyond December 14, Mirati will get accelerated approval. I am guessing, though, that it will not be positive for MRTX because Amgen now has a slight upper hand and without a singular win, no news is bad news for adagrasib.

If data is released earlier than the PDUFA, which seems almost certain, then adagrasib's accelerated approval status will be in doubt, and there could be a long delay, by up to 2 years. The FDA will have made this possible by surprisingly denying adagrasib 6-month priority review.

Financials

MRTX has a market cap of $3.05bn and a cash reserve of $1.3bn. Research and development expenses for the first quarter of 2022 were $131.0 million, while general and administrative expenses were $54.0 million. At that rate, the company has a cash runway of 6-7 quarters. However, note that there was almost a 50% increase in expenses in this quarter compared to the same quarter last year. The company should not become complacent about their cash reserves. However, expect G&A to increase because the company plans to be "fully launch-ready in the third quarter," in anticipation of the December 14 PDUFA. They do have cash enough to survive even if this PDUFA fails and they have to work through first line NSCLC.

Bottom Line

2022 is not going to be a good year for MRTX. I see no accelerated approval. Indeed, I think they may get frontline NSCLC with keytruda sooner than monotherapy, which will be a good thing in the longer term. Solid data in brain metastases - where lumakras has nothing - and in CRC - where lumakras also has nothing - will be key drivers of growth in the next 3 years; however, before that there will be a fall once December 14 does not work out.

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Disclosure: I/we have a beneficial long position in the shares of MRTX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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