One of the hottest stocks of 2020, Turning Point Therapeutics, Inc. (NASDAQ:TPTX) has suffered one of the biotech industry’s most stunning freefalls. A 483% run from the April 2019 IPO turned into a distant memory when the drug maker returned to the starting line last month, dipping under $25.
The volatile stock is once again piquing the interest of high-risk traders after the company announced encouraging data related to a pivotal trial. Wednesday’s 25% rally in heavy volume has put Turning Point back on the map as intriguing oncology biopharmaceuticals play.
Whether the stock can climb the roller coaster back above $100 remains to be seen, but a significant inflection point seems to be here.
What Does Turning Point Therapeutics Do?
Turning Point Therapeutics is a San Diego-based biotech company focused on developing precision oncology drugs. Once a fringe area of the field, precision oncology has quickly evolved into the mainstream of clinical practice. It uses molecular profiling to identify targetable alterations in tumors.
The company has discovered several investigational drugs which are said to go beyond the limits of existing cancer therapies. Its pipeline includes multiple tyrosine kinase inhibitors or TKIs. They are intended to be smaller and more precise than approved therapies which can be subject to treatment resistance.
Turning Point’s lead program is repotrectinib, a next-gen inhibitor that is designed to target non-small cell lung cancer (NSCLC) and advanced solid tumors. Repotrectinib is being evaluated in an early-stage clinical trial. Among Turning Point’s other therapeutic candidates is elzovantinib for advanced solid tumors which are also in early-stage clinical development.
What Did Turning Point Therapeutics Announce?
Last week the company reported positive topline results for repotrectinib in conjunction with the Phase 1-2 ‘Trident’ trial. It observed a 79% response rate in a study of 71 patients with advanced NSCLC. The data was provided by Blinded Independent Central Review (BICR), a process by which clinical data gathered across multiple sites is submitted to a central location for independent review.
Positive data was achieved in all four of the study’s cohorts which added credibility to the potential of the drug candidate. Within the TKI-naive population, progression-free survival rates were 85% and 82% at the 10-month and 12-month marks, respectively.
Management hosted a conference call pre-market on April 13th that was well received by investors. The day’s green volume spike, the biggest since December 2019, could mark the start of a fresh rally in early-stage biotech with multiple long-term growth possibilities. Turning Point is anticipating a pre-new drug application (pre-NDA) meeting with the FDA later this quarter.
Is Turning Point Therapeutics Stock a Buy?
In addition to the high volume spike, the technical picture has improved dramatically for Turning Point shareholders. The fact that the stock regained its 50-day moving average in a convincing fashion bodes well for at least the intermediate term. The last time it did so in above-average volume (12/17/21) Turning Point ran from $40 to $50 over a five-day stretch.
Also bullish is a double bottom chart formation from which the stock bounced on April 13th. After finding support at the $24 level for the second time in a month, a sharp move back above $30 points to a return to the $37 to $39 range in the coming weeks.
Turning Point suddenly has the wind at its back again. The momentum may continue if the company follows up its favorable clinical trial news with word of a meeting with the FDA. This could eventually lead to its submission of an NDA. The meeting alone would mark a major milestone for a company that was founded less than a decade ago.
Like most small-cap biotech companies, Turning Point is deep in the red having yet to commercialize any drugs. It posted a net loss of $4.61 per share last year and the Street is expecting a wider loss in 2022.
But with early-stage biotechs, it is the quality of the therapeutic pipeline that matters more and that appears to be in Turning Point’s favor. At this stage, most analysts see the risk-reward tradeoff as highly favorable.
Following the Trident update, sell-side research group H.C. Wainwright called the stock a ‘buy’ and gave it a whopping $161 price target. Investors that missed the run from $24 to $141 may be getting a second chance.
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