Stifel initiated coverage of Theseus Pharmaceuticals (NASDAQ:THRX) with a “buy” rating and $24 price target. The stock closed at $7.35 on March 15.
Theseus is a clinical-stage, small molecule oncology company that focuses on “pan” inhibition, or the ability for one drug to cover all potential primary (driver) and secondary (resistance) mutations of a single protein that is known to be oncogenic when mutated.
“Our buy thesis is primarily attributed to the lead program, THE-630, a pan-KIT mutant inhibitor in Phase 1 development with pivotal plans in second line gastrointestinal stromal tumor (GIST), which we believe could be a $1-billion market, and potentially in fifth line GIST, which represents an estimated $100-million to $150-million market,” writes analyst Bradley Canino.
He said his thesis can be broken down into two parts. First, “we believe THE-630 will cover all KIT mutations that drive GIST at its recommended Phase 2 dose, as recent competitor data have strongly validated Theseus’ preclinical tool used to design the compound. THE-630 will be the only therapy able to achieve pan-KIT inhibition in one molecule,” he added.
Second, “we believe a pan-KIT inhibitor like THE-630 will beat sunitinib head-to-head in a second line GIST trial, as all clinical evidence suggests the current tyrosine kinase inhibitors help only patients when the drug covers their baseline mutations, and patients progress through development or enrichment of uncovered mutations,” Mr. Canino said.
