Wolfe Research Starts CytomX Therapeutics (CTMX) at Outperform

Wolfe Research analyst Kalpit Patel initiates coverage on CytomX Therapeutics (NASDAQ: CTMX) with a Outperform rating and a price target of $3.50.

The analyst comments "The response rates in colorectal cancer are unusual. Varseta-M's confirmed response rates are ~20-32% in 3L+ mCRC -- five times what Lonsurf-bev delivers -- and these are late-line patients. The early-stage study enrolled pts with a median of 3 priors and 83% used prior anti-VEGF. Given the high response rates, we think there is opportunity to move into earlier lines. The bear case is tox, but we are not as concerned. Grade 3+ diarrhea at the active doses were 25-30%. Not good but the budesonide prophylaxis and adjusted bodyweight dosing lowered the rates to ~10%. For context, Trodelvy runs at 11%, Ziihera 10%, and FOLFIRI is ~9-20%. The 10% generated by Varseta-M is in range for a commercial oncology drug. We'd get worried if the 2H update moves back towards 20% -- but we don't think it will given lower hypokalemia rates in the optimized dosing portion. Competition exists but isn't clean. Merck KGaA's CEACAM5 ADC (Precemtabart tocentecan) is showing similarly high ORR but with a cleaner GI. However, it also has ~43% Gr 3+ neutropenia and ~10% febrile neutropenia -- which could be a community adoption problem. We see it as a different risk profile, not obviously better. And Varseta-M remains the only EpCAM ADC in the clinic, with no biomarker selection needed. The setup looks good. Shares have pulled back following the last clinical update, and we view the weakness as a buying opportunity. CytomX has three catalysts in the next ~12 months: (1) clinical update for mCRC in 2H; (2) FDA alignment on registrational design; and (3) initial bev-combo data in late 4Q26 or 1H27. Cash funds the company through Phase III initiation, DCF gets to $6/share on 50% POS in 3L+ ($700M peak), 20% POS 2L ($1B peak), modest ex-US."

For an analyst ratings summary and ratings history on CytomX Therapeutics click here. For more ratings news on CytomX Therapeutics click here.

Shares of CytomX Therapeutics closed at $3.50 yesterday.

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