HCW ups Calithera price target to $14

H.C. Wainwright raised its price target for Calithera Biosciences (NASDAQ:CALA) to $14 from $10, citing a recent partnership with Incyte and dilution from recent rounds of fund raising. The stock closed at $10.75 on March 28.

In January, Calithera partnered its first-in-class, selective inhibitor of arginase 1 and 2, CB-1158, with Incyte for $45-million upfront, $430-million in milestones, a 40% profit share in the U.S. and double-digit royalties outside of the U.S. Incyte also made an $8-million equity investment in Calithera.

Calithera recently began its Phase 1 trial of CB-1158 in patients with advanced solid tumors, presenting early pharmacodynamic data from three patients at the Society for Immunotherapy of Cancer meeting in November.

“We are only assigning a 6% probability of success to this program achieving peak worldwide sales of $2-billion by 2025, assuming modest peak penetration across a range of advanced cancers with pronounced arginase 1-positive myeloid cells in tumor tissue (i.e., lung, stomach, colon, bladder),” writes analyst Shaunak K. Deepak.

He figures Incyte will initially evaluate CB-1158 in doublet, for example, epacadostat or anti-PD1, and triplet combinations, for example, epacadostat and a checkpoint inhibitor.

“We believe the Incyte partnership provides the wherewithal to explore additional combination regimens for CB-1158,” he added. “That said, while we expect additional CB-1158 monotherapy data in mid-2017, we do not expect combo data until 2018.”

Calithera’s lead product candidate, CB-839, is an oral bioavailable inhibitor of glutaminase. CB-839 takes advantage of the pronounced dependency many cancers have on the nutrient, glutamine, for growth and survival. It is currently being evaluated in Phase 1/2 clinical trials in combination with standard-of-care agents.