Stifel initiated coverage of Black Diamond Therapeutics (NASDAQ:BDTX) with a “hold” rating and price target of $10. The stock closed at $9.06 on Sept. 29.
Black Diamond is focused on small molecule inhibitors developed with machine learning to be effective for families of oncogenic driver mutations in a tumor agnostic approach.
Lead asset, BDTX-189, is in a Phase 1 program and “inhibits HER2 wild-type, HER2ex20, multiple HER2 allosteric mutations and EGFRxe20,” writes analyst Bradley Canino.
“Our hold thesis is based on the hyper-competitive non-small cell lung cancer exon 20 markets, and our view that BDTX-189 will be a belated entrant in these markets with undifferentiated efficacy data that will result in low market share,” he said.
Mr. Canino said “each of these markets will have two-to-four approved drugs by the time of BDTX-189 entry, and the early BDTX-189 data produced more stable disease than the tumor shrinkage required to be competitive.”
However, he said BDTX-189’s major advantage is the emerging safety profile that does appear best-in-category and may allow for better combination regimen approaches relative to competitors.
But there are no clear combination development plans, so “we do not view this strategy as a near-term catalyst for the stock relative to the monotherapy developments in these markets,” Mr. Canino said.
