Daily Stock Watch: ORIC Storms Higher on Pfizer Deal

By Duncan Ferris


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With a new collaboration with Pfizer announced, ORIC Pharmaceuticals shares have jumped by more than 50% on Thursday. But is ORIC stock a good investment?

Photo by Louis Reed on Unsplash

ORIC Pharmaceuticals (NASDAQ: ORIC) saw its share price jump by more than 50% on Thursday after securing a clinical development collaboration with Pfizer Inc (NYSE: PFE).

The collaboration, which is for a potential Phase 2 study of ORIC’s ORIC-533 treatment candidate in multiple myeloma, has also seen the business agree to sell around 5.4 million shares at $4.65 per share to Pfizer. This means gross proceeds of approximately $25.0m for ORIC.

The company said these proceeds will fund ongoing and planned clinical trials, including studies of ORIC-533, ORIC-114, and ORIC-944, and for working capital and general corporate purposes.

ORIC CEO Jacob Chacko commented:

“Given Pfizer’s strong commitment, extensive capabilities and deep expertise in developing treatments for oncology, including elranatamab in multiple myeloma, we are proud to partner with them to develop a potential novel treatment regimen for patients with multiple myeloma.

“We look forward to realizing the full potential of ORIC-533 and continuing to advance our promising pipeline.”

What is ORIC Pharmaceuticals?

ORIC Pharmaceuticals is a clinical-stage biopharmaceutical company which aims to discovers and develop therapies for treatment of cancers.

Its clinical stage product candidates include ORIC-533, an orally bioavailable small molecule inhibitor of CD73 being developed for resistance to chemotherapy- and immunotherapy-based treatment regimens. 

At a similar stage of development are ORIC-944, an allosteric inhibitor of the polycomb repressive complex 2 for prostate cancer, and ORIC-114, a brain penetrant orally bioavailable irreversible inhibitor designed to selectively target epidermal growth factor receptor and human epidermal growth factor receptor 2 with high potency towards exon 20 insertion mutations. 

The company is also developing multiple discovery stage precision medicines targeting other cancer resistance mechanisms.

The business has a license and collaboration agreement with Voronoi Inc and a license agreement with Mirati Therapeutics, Inc.

The company was incorporated in 2014 and is headquartered in South San Francisco, California.

ORIC Stock Financials

The business’ most recent earnings, which covered the three-month period ended 30 September, showed it had seen an uptick in expenses. With research and development costs climbing from $12.9m to $14.7m and general and administrative expenses also rising, total operational costs rose by 39.2% to $25.7m for the period.

With the company yet to generate any significant revenues, this meant a widened loss. Net loss per share amounted to $0.63, compared with $0.47 in the same period 12 months prior.

The business said at the time it had cash, cash equivalents and short-term investments of $193.7m. Including Pfizer’s equity investment, ORIC expects its cash runway to be extended into the first half of 2025.

ORIC Investment Risks

Investing in development stage pharmaceutical businesses is inherently risky due to the length of time until they will reach the commercial stage. With ORIC yet to commence Phase 2 testing on its candidates, the business has some distance before it becomes a revenue generating concern.

In the meantime, a multitude of factors could derail the business’ operations. After all, overall success rates from Phase I to FDA approval is just 9%.

The company has already given its existing investors a taste of this disappointment with its ORIC-101 treatment. This treatment, which was the business’ lead candidate, flunked out of phase 1 trials due to a lack of efficacy, sending the share price plummeting.

ORIC Growth Potential

While the last section covered the potential for doom and gloom in the world of clinical trials, this segment might be a bit of a tonic. That’s because, despite the poor showing from its lead candidate earlier in the year, ORIC has enjoyed some success this month.

On 13 December the business was able to present positive preclinical data on its ORIC-553 treatment, claiming that these show its ability to reduce adenosine generation, overcome immune suppression and restore lysis of multiple myeloma cells. 

As such, the emergence of Phase 1B data for the treatment is keenly awaited. Along with Phase 1B data from ORIC-114 and ORIC-944, this is expected at some point in the first half of 2023.

Is ORIC a Good Investment?

Of course, the investment is inherently speculative due to the company’s status as a development stage business. However, ORIC is very well funded for a company at such an early stage, while collaborations with big-name parties like Pfizer are a reassuring sign for the business.

These instantly make the company a more attractive investment than many of its peers. However, potential investors should explore details of the company’s treatment candidates in order to make an informed decision about backing ORIC stock.

The six analysts listed by the Wall Street Journal who cover the stock offer an average rating of Overweight. Their consensus price target for the stock is $13.75.

If you enjoyed our ORIC Pharmaceuticals coverage, you may be interested in our recent Daily Stock Watch articles or our IPO coverage.

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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