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Investors Business Daily
Technology
ALLISON GATLIN

Nuvalent Flies On 'Multibillion-Dollar' Potential, While Iteos Crashes On Patient Deaths

Biotech stocks Nuvalent and Iteos Therapeutics diverged Monday on updates for their lung cancer treatments at the European Society for Clinical Oncology meeting in Madrid.

Nuvalent presented promising results for two drugs in patients with non-small cell lung cancer and specific genetic mutations. Its drug, NVL-655, works by targeting a genetic change in the ALK gene. The other, called zidesamtinib, focuses on mutations in the ROS1 gene.

In the former population, 38% of patients responded to treatment. More than four in 10 patients — 44% — with ROS1 genetic mutations responded to treatment with zidesamtinib.

"We think Nuvalent is well on its way to unlocking the multibillion-dollar potential of '655 as well as the several hundred million dollar potential of zidesamtinib," Piper Sandler analyst Christopher Raymond said in a report.

Meanwhile, Iteos tested its immuno-oncology drug in patients with high levels of a receptor called TIGIT. Overall, 59% of patients responded to treatment. But three patients died in its study.

Nuvalent stock surged 28.3% to 112.17, while Iteos stock crashed 27.5%, closing at 12.10.

Biotech Stocks Diverge On Cancer Treatments

Analysts say Nuvalent's results suggest its drugs could have best-in-class profiles.

Notably, NVL-655 appears to interact with tumors in the central nervous system, Wedbush analyst David Nierengarten said in a report. He raised his price target on biotech stock Nuvalent to 115 from 99, and kept his outperform rating.

Nuvalent is now planning to have pivotal data from studies of NVL-655 and zidesamtinib in 2025.

"With multiple registrational paths leading to potential product launches for both zidesamtinib and NVL-655 in 2026, and a defined strategy to pursue the significant (previously untreated) ALK positive non-small cell lung cancer market, we remain bullish on Nuvalent shares," he said.

Leerink Partners analyst Andrew Berens also raised his price target on the biotech stock to 125 from 110.

"Nuvalent remains one of our highest conviction names into year-end, with fundamental and strategic value driven by peak revenues of over $6 billion for '655 and $1 billion for zidesamtinib," he said in a client note.

Iteos Hammered On Side Effects

Iteos delivered promising results for its immuno-oncology drug in patients with high levels of a receptor called TIGIT lung cancer tumors. But the biotech stock skidded on side effects.

Officially, 59% of patients who received a two-drug combination using belrestotug. Iteos is testing the drug in partnership with GSK. Piper Sandler's Raymond says investors were looking for at least a 55% to 60% response rate.

But three patients died from immune-related complications in Iteos' study. Other side effects were largely related to the immune system.

"We view the (adverse events) as manageable considering the affected organ systems were mostly skin (50%) or endocrine (26%) and treatable with steroids," Wedbush's Nierengarten said in a second report to clients.

He kept his outperform rating on the biotech stock, and raised his price target to 25 from 21.

Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.

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