On Thursday, BofA Securities maintained its Neutral rating on Arcus Biosciences (NYSE:RCUS) with a steady price target of $22.00. The affirmation follows a recent investor Q&A session with Arcus management, which discussed the ARC-20 casdatifan (cas) presentation at the European Neuroendocrine Association (ENA).
The analyst noted that the Q&A did not provide substantial new insights. Arcus management expressed confidence in casdatifan, citing its potential in the post-immuno-oncology metastatic Renal Cell Carcinoma (mRCC) market, which they believe represents a greater than $2 billion opportunity. They pointed to casdatifan's possibly improved profile compared to Merck's Welireg.
However, the analyst highlighted that the data on casdatifan are still in the early stages. Concerns were raised regarding the selection of appropriate comparators for the drug's trials, the typical reduction in effect observed when moving to larger pivotal studies, and other uncertainties that make it difficult to determine casdatifan's level of differentiation at this time.
The report also mentioned the strong commercial infrastructure and developmental lead of Merck, which could pose significant challenges to casdatifan's commercial success. The debate about the potential market share and upside of casdatifan is expected to continue.
In conclusion, while there may be opportunities for both casdatifan and Merck's asset to be successful in the market, the analyst believes that there are more attractive investment opportunities in the near term within the sector. The price objective remains unchanged at $22.
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