Novocure stock advanced Wednesday morning — but pulled back from more massive gains — after the Food and Drug Administration approved its treatment for patients with metastatic lung cancer.
At the close Novocure shares gained a fraction, closing at 17.87 and declining from a roughly 25% gain late Tuesday. On Tuesday the company announced the FDA approved its Optune Lua device for non-small cell lung cancer treatment. Optune Lua uses electrical fields at specific frequencies to block the rampant spread of cancer cells. The company calls this technology tumor-treating fields, or TTFields.
The FDA approval comes despite somewhat muddy results from Novocure's final-phase study. In that test, Novocure studied its body-worn device plus drugs like Merck's Keytruda and Bristol Myers Squibb's Opdivo. But it worked with patients who worsened after receiving chemotherapy. Most patients today don't start treatment with chemo.
"Looking ahead, we believe commercial execution for Optune Lua in NSCLC will be in focus for investors, who may remain skeptical on the opportunity given the Phase 3 results," Leerink Partners analyst Jonathan Chang said in a report.
He raised his price target on Novocure stock by 2 to 28, and kept his outperform rating.
Novocure Stock: Mixed Results In Phase 3 Testing
Specifically, the FDA approved Optune Lua for non-small cell lung cancer patients who are currently receiving treatment with checkpoint inhibitors — which includes drugs like Keytruda and Opdivo — and have worsened while undergoing one previous treatment.
Patients who wore Optune Lua lived a median of 3.3 months longer than those who didn't.
The company said there was a "profound" benefit in patients who wore Optune Lua and received a checkpoint inhibitor like Keytruda or Opdivo. Those patients lived a median of 7.7 months longer than patients treated with checkpoint inhibitors alone.
Wedbush analyst David Nierengarten isn't confident in Optune Lua's uptake. He projects $4.3 million, $13.5 million and $38.9 million in sales in 2025, 2026 and 2027, respectively. Optune Lua's position in the market will be more clear after Novocure unveils the results of a study testing the device with checkpoints inhibitors in previously untreated lung cancer patients.
He reiterated his neutral rating and 24 price target on Novocure stock.
Shares Are Forming A Double-Bottom Base
Still, the approval should help alleviate some pressure on Novocure stock, Evercore ISI analyst Vijay Kumar said in a client note. Shares are nearing a breakout out of a double-bottom base with an entry at 23.87, according to MarketSurge.
Since the June 2023 presentation, Novocure stock has pulled back markedly. The company also had a miss in ovarian cancer treatment and a management transition. The next catalyst for shares will be the results of a study in patients with locally advanced pancreatic cancer, Wedbush's Nierengarten said.
Evercore's Kumar maintained his in-line rating on Novocure stock.
The company has a "long path ahead for reimbursement and therapy adoption," he said. He doesn't expect any meaningful revenue from lung cancer patients in 2025.
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