We are short shares of Mirati Therapeutics, Inc. Please click here to read full disclosures.
We are short shares of Mirati Therapeutics, a $4.6bn clinical-stage biopharmaceutical company whose lead drug candidate, MRTX-849, is a small-molecule KRAS inhibitor (KRASi). The KRAS protein plays a critical role in cell proliferation and differentiation, and mutations of the gene that encode it are present in one of seven tumors, and in over 30 percent of lung adenocarcinomas. Cracking KRAS has long been one of the holy grails of cancer research, and in the last year, both Amgen and Mirati have suggested they’re close.
Both companies have released Phase I data showing that their respective KRASi are capable of shrinking tumors in second-line treatment of patients with KRAS-mutated non-small-cell lung cancer (NSCLC). The compounds also seem to work as intended: by inhibiting the signaling activity of the specific KRAS mutant (KRASG12C) that accounts for ~12-14% of all NSCLC diagnoses. As the only pure KRAS proxy, Mirati’s market value has soared. But lost in the euphoria is a realistic assessment of the data and its implications for Mirati. While Amgen’s AMG-510 and Mirati’s MRTX-849 have indeed induced responses in NSCLC patients, it’s becoming clear that the response rate is low and the duration of these responses is incredibly short-lived. That makes approval of the drugs as single agent therapies extremely unlikely, even in second line treatment.
As the clinical futility of these KRASi as monotherapy is slowly recognized, the emphasis of the research – and anticipation – is shifting towards their use in a variety of combination therapies, both in first- and second-line treatment. But the data and research are not encouraging. Recent data on the efficacy of checkpoint inhibitors in KRAS-mutant NSCLC strongly suggests that combining them with KRAS inhibition would do nothing to enhance their already robust effect and could even be detrimental. Research has also recently revealed considerable heterogeneity in KRAS-mutant tumors, which utilize a wider range of molecular pathways to continue proliferating than had been previously assumed. The upshot is that successful combinations of ‘849 with other targeted therapies are unattainable because it’s impossible to know in which patients they will be effective. If that weren’t enough, combination attempts are also all but certain to encounter toxicity issues.
The KRAS space is also on the verge of an influx of competition, with several players – including Revolution Medicines and Boehringer-Ingelheim – taking differentiated approaches to targeting KRAS that bypass the resistance mechanisms that ‘849 has been shown to encounter. These compounds are already in the clinic, and even if Mirati can somehow identify a patient population in which ‘849 is effective, maintaining market share will be a constant battle. The last decade has shown that first-generation targeted therapies are quickly followed by more potent and effective second-generation compounds. For KRASi, these are already in the clinic recruiting patients for Phase 1 trials, but none are in Mirati’s almost-empty pipeline.
Finally, while most and a of Mirati’s value is tied up in the dream of ‘849, investors are still ascribing significant value to Mirati’s other oncology compound, sitravatinib. But given sitravatinib’s almost-complete failure as a single agent, we’re confident the drug will fail the multiple combination trials Mirati is now conducting. Bolstering our confidence are the weak data, a barely believable mechanism of action, sloppy trial riddled with data discrepancies and irregularities that are easily identified in Mirati’s sitravatinib presentations. With both ‘849 and Sitravatinib destined for futility, and its pipeline practically non-existent, Mirati investors will soon discover that the only thing the company can successfully inhibit is their performance.
Read full report here.