Mirati To Launch $700M Public Offering; Shares Fall After-Hours

Mirati Therapeutics (MRTX) has announced that it intends to offer and sell in an underwritten public offering $700 million of shares of its common stock and a selling stockholder intends to offer 375,000 shares in the offering. Shares in the oncology company dropped 3% in Monday’s after-hours trading.

In addition, Mirati and the selling stockholder expect to grant the underwriters of the offering a 30-day option to purchase up to an additional 15% of the total shares offered in the public offering at the public offering price, less the underwriting discounts and commissions.

Mirati adds that it will not receive any proceeds from the sale of shares in the offering by the selling stockholder. The offering is subject to market and other conditions.

The equity offering follows the release of Mirati’s preliminary results from its mutant KRAS selective inhibitor programs showing promising anti-tumor activity. As a result the stock spiked 9% on Monday.

The preliminary results included updated clinical data of adagrasib (MRTX849), the company’s KRAS G12C inhibitor, and initial preclinical in vivo data of MRTX1133, Mirati’s selective and potent potential first-in-class KRAS G12D inhibitor.

“The adagrasib preliminary data presented today showed deep and durable anti-tumor activity in non-small cell lung cancer (NSCLC), colorectal cancer (CRC) and other solid tumors, providing renewed hope for patients that harbor a KRAS G12C mutation” commented Charles M. Baum, CEO of Mirati.

Indeed, adagrasib demonstrated a 45% confirmed objective response rate as a monotherapy in advanced NSCLC. Meanwhile 70% (16/23) of responders had a best tumor response greater than 40%.

“Adagrasib has been well tolerated as a monotherapy and in combination with pembrolizumab, cetuximab and TNO-155, a SHP-2 inhibitor. We are initiating additional registration-enabling global clinical studies of adagrasib as both a monotherapy and in combinations as we expand the program to earlier lines of therapy in NSCLC and CRC” the CEO said.

At the same time MRTX1133 demonstrated tumor regression in multiple in vivo tumor models, including pancreatic and colorectal cancers- potentially building up to an Investigational New Drug filing in the first half of 2021.

Overall, shares in Mirati have surged 53% year-to-date, and the stock scores a bullish Strong Buy Street consensus. However, due to the recent rally, the average analyst price target indicates marginal upside potential from current levels.

“We reiterate our Buy rating and are increasing our price target to $238 from $222 due to our increased probability of success (PoS) for adagrasib” commented HC Wainwright analyst Ed White on October 26.

He called the updated data for the drug ‘remarkable’, saying that the safety and efficacy data could lead to accelerated approval in NSCLC. White estimates adagrasib sales of $105.8M in 2022, growing to approximately $2.6B in 2028. (See MRTX stock analysis on TipRanks)