On Wednesday, Jones Trading initiated coverage on ORIC Pharmaceuticals (NASDAQ: ORIC), assigning a Buy rating with a price target of $17.00. The firm's analysis highlights ORIC's focus on developing targeted therapeutics for non-small cell lung cancer (NSCLC) and metastatic prostate cancer, noting the company's experienced management team's previous success with entrectinib at Ignyta.
ORIC Pharmaceuticals is working on treatments for genetically defined NSCLC and broad metastatic prostate cancer. The management team, including CEO Jacob Chacko and CMO Pratik Multani, has been recognized for their work in developing entrectinib, which was acquired by Roche (LON:0QQ6) for $1.7 billion in 2018. Jones Trading sees a parallel strategy in ORIC's development plan, specifically targeting EGFR/HER2 ex20ins and EGFR atypical mutated NSCLC.
Despite competition in the EGFR/HER2 space for NSCLC, Jones Trading believes ORIC shows differentiation through specificity, mutation coverage, and a safety profile that could allow for combination therapies. The firm cites the example of Alecensa, which generated sales of $1.7 billion in 2023 in ALK+ NSCLC, suggesting a similar market opportunity for ORIC's '114.
In the prostate cancer space, Jones Trading points to the potential of ORIC's second asset, which targets the EED subunit of PRC2 and was in-licensed from Mirati. With the trend of treating prostate cancer patients with AR inhibitors at earlier stages, the firm anticipates ORIC may advance their treatments to earlier line settings based on Phase 1b data.
Jones Trading projects probability-adjusted worldwide peak sales of approximately $350 million in 2035 for ORIC's NSCLC treatment with EGFR/HER2 ex20ins or atypical EGFR mutations. For metastatic castration-resistant prostate cancer (mCRPC) post Zytiga, they forecast peak sales of about $575 million in 2036.
With over 12 months of cash reserves, a capable management team, and several data updates anticipated in 2025, Jones Trading has expressed confidence in ORIC Pharmaceuticals by initiating coverage with a Buy rating and setting a price target of $17.00.
In other recent news, ORIC Pharmaceuticals has made significant advancements in its drug development. The company's drug candidate, ORIC-114, has shown promise in preclinical studies, exhibiting superior potency and selectivity compared to other EGFR inhibitors in treating non-small cell lung cancer. Additionally, the company has initiated dosing for its lead product, ORIC-944, in a Phase 1b trial for metastatic prostate cancer, in collaboration with Bayer (OTC:BAYRY) and Janssen Research & Development.
Analysts have also been active in their coverage of ORIC Pharmaceuticals. Stifel has initiated coverage with a Buy rating and a target of $20, emphasizing the company's potential in the prostate cancer treatment market. H.C. Wainwright has maintained its Buy rating and $21 price target, advising against comparing ORIC's results with those of competitor Ipsen's trials due to differences in patient populations and baseline disease measurability.
Meanwhile, Citi has adjusted its price target for ORIC from $15 to $14, maintaining a 'Buy' rating. This follows insights into future clinical developments, including the combination trials for ORIC-944. Lastly, Oppenheimer has revised down ORIC's price target from $17 to $15 ahead of the company's fourth fiscal quarter results, maintaining an Outperform rating. These projections include a year-over-year increase of 5.9% and a quarter-over-quarter rise of 5.6%.
InvestingPro Insights
ORIC Pharmaceuticals' financial profile offers additional context to Jones Trading's bullish outlook. According to InvestingPro data, the company has a market capitalization of $665.92 million, reflecting investor interest in its potential. However, ORIC's financial metrics reveal both challenges and strengths.
An InvestingPro Tip highlights that ORIC is quickly burning through cash, which aligns with the company's developmental stage and intensive R&D efforts in oncology. This cash burn is reflected in the adjusted operating income of -$125.12 million for the last twelve months as of Q2 2024. Despite this, another InvestingPro Tip notes that ORIC holds more cash than debt on its balance sheet, suggesting a degree of financial stability as it pursues its clinical programs.
The company's stock has shown volatility, with a 1-year price total return of 41.29% as of the latest data, indicating significant investor optimism over the past year. This performance supports Jones Trading's positive stance on ORIC's potential.
For investors seeking a deeper understanding of ORIC's financial health and market position, InvestingPro offers 7 additional tips, providing a more comprehensive analysis to inform investment decisions.
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