Mirati Therapeutics (MRTX) is under pressure on Tuesday after Kerrisdale Capital said it is short shares of the company and that investors are “ignoring KRASi risks.” Further, the short-seller argued that while most of Mirati’s value is tied up “in the dream of ‘849,” investors are still ascribing significant value to the company’s other oncology compound, sitravatinib, which Kerrisdale expects will fail the multiple combination trials Mirati is now conducting. INVESTORS IGNORING KRASI RISKS: In a newly published report, Kerrisdale Capital said it is short shares of Mirati Therapeutics, a clinical-stage biopharmaceutical company whose lead drug candidate, MRTX-849, is a small-molecule KRAS inhibitor. “While most 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, and a 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,” the report reads. “Mirati’s opportunity set is therefore best described as an extremely low-percentage chance of attaining a low-percentage share of a $600-800 million market circa 2025. What’s that worth right now? A small fraction of $4.6 billion. Investors who have gambled on the M&A prospects of what amounts to a single dead-end compound will soon find out they’re on the wrong path.” PRICE ACTION: In morning trading, shares of Mirati have dropped almost 5% to $91.05.
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