On Friday, Bernstein SocGen Group maintained its Outperform rating on Daiichi Sankyo Company, Limited (4568:JP) (OTC: DSNKY), with a steady price target of JPY6,400.00. The firm's outlook remains positive despite acknowledging the complexity of developing antibody-drug conjugates (ADC) for targets other than HER2. The success of Daiichi Sankyo's Enhertu, particularly for a variety of HER2-overexpressed cancer types, was highlighted as a significant achievement.
The recent approval by the FDA of Enhertu for pre-treated HER2-positive solid tumors, which is a tumor agnostic label, was noted as a key development. This approval underscores the drug's versatility and effectiveness across different cancer types beyond breast cancer. Bernstein's commentary emphasized that Enhertu's triumph is partly due to HER2 being a "well-behaved" target for ADC, which contributed to the drug's success.
However, the firm also pointed out the challenges in replicating Enhertu's success with Daiichi Sankyo's other ADCs. The behavior of other target proteins, which are not as amenable as HER2 for ADC development, has been a hurdle. This has been evident in the development of Trop2-targeting Dato DXd, where Daiichi Sankyo and its partner did not observe a consistent correlation between the protein's expression level and the drug's efficacy.
The analysis provided by Bernstein suggests that while HER2 is a straightforward target for ADC development, other targets present more significant challenges. This distinction has become apparent in the development process of Daiichi Sankyo's ADCs, where some targets have not behaved as predictably as HER2.
In conclusion, Bernstein's reiteration of the Outperform rating and price target for Daiichi Sankyo reflects confidence in the company's current ADC Enhertu, despite the complexities involved in expanding its ADC portfolio to other targets. The firm's outlook is based on the current success and regulatory advancements of Enhertu, while also acknowledging the difficulties faced with other ADCs in the pipeline.
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