On Tuesday, H.C. Wainwright upgraded shares of NovoCure Ltd. (NASDAQ: NASDAQ:) from Neutral to Buy, setting a price target of $30.00. The upgrade followed the recent FDA approval of NovoCure’s Optune Lua for the treatment of metastatic non-small cell lung cancer (NSCLC) in combination with PD-(L)1 inhibitors or docetaxel for patients who have progressed on or after platinum-based chemotherapy.
The FDA’s decision was influenced by the results of the Phase 3 LUNAR study, which showed a significant extension in median overall survival (OS) for patients treated with Optune Lua. The study reported a median OS of 13.2 months for the treatment group versus 9.9 months for the control. Notably, patients receiving Optune Lua with PD-1/PD-L1 inhibitors had a median OS of 19.0 months, contrasting with 10.8 months for those on PD-1/PD-L1 inhibitors alone.
While the results for patients treated with Optune Lua and docetaxel did not show a statistically significant improvement, the FDA still included docetaxel in the broad label approval. This decision came as a positive surprise to observers and analysts, considering the limited percentage of patients in the LUNAR study who had prior PD-(L)1 inhibitor use and the potential need for additional data.
The approval positions Optune Lua as the first treatment approved for this setting, with a benign safety profile. The analyst expressed optimism about the potential market opportunity for Optune Lua in the second-line NSCLC treatment, anticipating that it could exceed the commercial success of NovoCure’s glioblastoma business and drive significant sales growth post-2025.
The positive outlook and the broad label approval by the FDA were key factors in the firm’s decision to raise the price target from the previous $24.00.
In other recent news, Novocure announced a leadership transition with CEO Asaf Danziger planning to retire at the end of 2024, and current CFO Ashley Cordova set to succeed him.
Novocure reported a rise in its second quarter sales to $150.4 million, an 8.6% increase from the first quarter of 2024, largely due to the successful launch of Optune in France. The number of active patients using their therapy reached a record high of 3,963 in the second quarter. Findings from the phase 3 METIS trial showed that its Tumor Treating Fields therapy significantly delayed the progression of brain metastases in patients with non-small cell lung cancer.
Analyst firm H.C. Wainwright adjusted its 2024 revenue estimates for NovoCure to $586.6 million, indicating a potential year-over-year growth rate of 16.7%. These are some of the recent developments at Novocure.
InvestingPro Insights
Following the FDA approval of NovoCure’s Optune Lua and H.C. Wainwright’s upgrade, investors may find additional value in examining some key financial metrics and insights from InvestingPro.
NovoCure’s impressive gross profit margin of 75.96% for the last twelve months as of Q2 2024 aligns with one of the InvestingPro Tips highlighting the company’s “impressive gross profit margins.” This strong profitability at the product level could support the commercialization efforts for Optune Lua in the NSCLC market.
Another relevant InvestingPro Tip notes that “6 analysts have revised their earnings upwards for the upcoming period,” which may reflect growing optimism about NovoCure’s prospects following the FDA approval. This positive sentiment is further supported by the company’s recent performance, with a “significant return over the last week” of 21.28% and a substantial “6 Month Price Total Return” of 42.7%.
It is worth noting that NovoCure “holds more cash than debt on its balance sheet,” which could provide financial flexibility as the company expands into the NSCLC market. However, investors should be aware that analysts “do not anticipate the company will be profitable this year,” despite the positive developments.
For those interested in a more comprehensive analysis, InvestingPro offers 5 additional tips and a range of financial metrics to further evaluate NovoCure’s investment potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.