WB starts Calithera at OP

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William Blair launched coverage of Calithera Biosciences (NASDAQ:CALA) with an “outperform” rating. The stock closed at $16.05 on Oct. 5.

“Continued clinical catalysts and a clear development path with the company’s wholly owned glutaminase inhibitor, CB-839, over coming months will drive stock outperformance,” writes analyst Matthew Phipps.

Calithera is focused on the development of a novel class of drugs aimed to disrupt key metabolic processes that enable cancer cells to grow, thrive, and evade destruction by immune cells.

“Despite a very strong stock performance year-to-date following the Incyte collaboration, the company continues to trade at an enterprise value of only $350 million, below many peers with similarly staged assets,” Mr. Phipps said.

Lead compound CB-839 is advancing in several tumor types, including renal cell carcinoma (RCC), triple-negative breast cancer, melanoma, and non–small cell lung cancer.

Mr. Phipps said the company has generated encouraging proof-of-concept data in third-line RCC patients, and “we believe it has a promising development path with potential approval, if successful in an ongoing Phase 2 study, potentially representing over a $500-million opportunity.”

Continued clinical progress in RCC and other tumor types, most notably in combination with Opdivo, has the potential to further expand the market opportunity for CB-839, he added.