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Mirati (MRTX) Up 6.8% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Mirati (MRTX - Free Report) . Shares have added about 6.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Mirati due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Mirati’s Earnings Beat Estimates in Q2, Pipeline in Focus

Mirati incurred a loss of $1.89 per share in the second quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.10 but wider than the year-ago quarter’s loss of $1.26.

The company did not generate any license and collaboration revenues in the second quarter. The Zacks Consensus Estimate was of $1 million.

General and administrative expenses jumped 100% to $19.8 million due to higher share-based compensation expense and employee-related costs in the quarter. Research & development expenses surged 70% to $65.1 million due to costs related to pipeline development and higher salary costs.

The company ended the June quarter with $645.7 million in cash and cash equivalents compared with $695.4 million as of Mar 31, 2020.

Pipeline Update

Mirati's lead drug candidate sitravatinib is being evaluated in a registration-enabling phase III study in combination with a checkpoint inhibitor for non-small cell lung cancer (NSCLC). The company is also developing novel inhibitors of KRAS mutations including MRTX849.

Enrollment is currently underway in the phase I/II KRYSTAL study evaluating MRTX849 as a monotherapy for treating the second or third-line therapy in NSCLC and in combination with Merck’s Keytruda (pembrolizumab) for the first-line NSCLC. MRTX849 is also being evaluated as a single agent and in combination with Eli Lilly’s EGFR inhibitor Erbitux (cetuximab) for the second-line colorectal cancer (CRC).

Enrollment is further underway in the phase I/II combination study of MRTX 849 with Novartis' SHP2 inhibitor TNO155 for the second or third-line NSCLC and CRC.

Meanwhile, enrollment is currently ongoing in the phase III SAPPHIRE study, which is evaluating sitravatinib in combination with Opdivo for treating patients with NSCLC.

Along with the earnings release, the company announced that it selected a lead clinical candidate MRTX1133and advanced the IND-enabling GLP toxicology studies for the same.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 8.14% due to these changes.

VGM Scores

Currently, Mirati has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Mirati has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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