9 Companies Bracing for Big ASCO Reactions

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This year marks the 54th annual meeting of the American Society of Clinical Oncology (ASCO). Biotech and pharmaceutical companies will descend on Chicago for a five-day all-out conference (June 1 to 5) on the development of cancer treatments. This is known as the world’s largest clinical cancer conference, and it always delivers new results on clinical trials and updated treatments in the field. Not to mention, this conference has the potential to make or break companies in the space, depending on their results.

The theme for this year’s conference is “Delivering Discoveries: Expanding The Reach of Precision Medicine,” which focus on making precision medicine a reality by driving progress and expanding its reach so that every patient can have the opportunity to benefit. This year is expected to see over 39,000 attendees, counting among them the world’s best oncologists, researchers and scientists.

Many of the abstracts for ASCO already have been released and stocks have moved in anticipation. However, still more abstracts will be released the day of the presentation.

24/7 Wall St. takes a look at the ASCO annual meeting each year and picks out the companies that could have the biggest boom or bust at the conference.

Merck & Co. Inc. (NYSE: MRK) will be presenting results of the Keynote-042 trial for Keytruda monotherapy in front-line non-small cell lung cancer (1L NSCLC). This abstract has not been released, but the data is expected to be very impressive and practice-changing, given it was selected to be presented in the main Plenary Session of the meeting. According to Credit Suisse:

We continue to believe this data will help drive upside to Keytruda estimates for 2H 2018 and into 2019. Initial details from KEYNOTE407 in squamous lung cancer abstract show a solid ORR benefit for Keytruda + chemo vs. chemo alone, but we believe survival data (as well as an indirect comparison to Roche’s IMpower131 data) are needed to fully assess the study’s impact. Additional Keytruda data in other tumor types should also support our view that Merck’s I-O opportunity is much broader than just lung cancer, something that we expect to become clearer to investors as we go through ASCO. New Phase 2 data for Lynparza (with AstraZeneca) in combination with Zytiga in prostate cancer and data for Keytruda plus Lenvima (with Eisai) in multiple tumor types should also help investors assign value to recent collaborations that MRK has pursued to broaden out their oncology franchise.

Shares of Merck closed Friday at $59.14 apiece, with a consensus analyst price target of $68.40 and a 52-week trading range of $52.83 to $66.41.

Bristol-Myers Squibb Co. (NYSE: BMY) is looking to present new data from its CheckMate-227 study, which will provide a first assessment of Opdivo plus chemotherapy in 1L NSCLC. Analysts are expecting data for the Opdivo plus Yervoy plus chemo arm at ASCO, but a descriptive analysis in the abstract suggests a progression-free survival (PFS) benefit for Opdivo plus chemo vs. chemo alone. Credit Suisse believes that this should help ease concerns around Opdivo being an inferior drug to Keytruda (at least in this population), but the firm still sees Bristol-Myers being very challenged in gaining traction commercially in 1L NSCLC for the next one to two years.

Shares of Bristol-Myers closed the week at $52.71, with a consensus price target of $59.20 and a 52-week range of $49.96 to $70.05.

Johnson & Johnson (NYSE: JNJ) published impressive data for its FGFR inhibitor erdafitinib in bladder cancer, showing a 70% confirmed overall response rate (ORR) in patients who had received prior immune checkpoint inhibitors. The company already has started a Phase 3 trial in this indication, and the drug has been granted Breakthrough Therapy Designation from the FDA. Based on the data in the abstract, this could be another pharma asset for the company that could drive underappreciated upside.

The stock was last seen at $124.24 per share. It has a 52-week range of $121.28 to $148.32 and a consensus price target of $145.10.