ArriVent's stock plummeted 47% following the failure of its cancer drug. Is there a chance for a rebound?

Shares of biotech company ArriVent BioPharma lost nearly half their value during trading on October 6—following the release of what the company itself described as “disappointing” results from a study of its lung cancer drug candidate. ArriVent is reviewing the data to determine the drug’s future development path, and several analysts have already lowered their price targets for the stock.

On Tuesday, October 6, ArriVent’s stock price fell 47% on the Nasdaq to $15.09. After trading began on October 7, the biotech stock rose—at the time of publication, it was up 5%.

The company released disappointing results from the Phase 3 clinical trial of its drug, firmonertinib, which is intended for the treatment of non-small-cell lung cancer.

ArriVent reported that, in a Phase 3 trial, firmonertinib failed to meet the study’s primary endpoint—improved progression-free survival—in patients with lung cancer and specific mutations in the EGFR gene. According to an independent review committee, the drug did not demonstrate a statistically significant improvement in this outcome compared with standard chemotherapy.

The median progression-free survival was 11 months in patients receiving a higher dose of firmonertinib, compared with 9.5 months in the chemotherapy group. At a lower dose of the drug, the figure was 8.4 months. The study also yielded positive results: at the higher dose, tumors shrank in 60% of patients, compared with 33% in the chemotherapy group.

“These disappointing results are not what we had hoped for,” said ArriVent CEO Bin Yao, as quoted in a press release. — …We are currently analyzing the full set of data from the study to determine the most appropriate next steps for the development of firmoneritinib.”

Firmonertinib is a tablet-form medication that blocks a protein that promotes tumor growth. The drug has already been approved in China for certain categories of patients.

ArriVent planned to bring drugs developed in China to Western markets through licensing agreements. The company acquired the rights to develop and commercialize firmonertinib outside of China from the Chinese company Allist in 2021. ArriVent currently has seven development programs; among them, the company is investigating firmoneritinib as a first-line treatment for patients with PACC mutations in the EGFR gene, which contribute to the development of lung cancer.

Another of the company's drug candidates—ARR-217—is intended for the treatment of gastrointestinal tumors and has moved into the first phase of clinical trials.

In light of the unsuccessful trials, several analysts immediately lowered their price targets: for example, BTIG analyst Jit Mukherjee lowered his price target for ArriVent Biopharma shares from $42 to $29, while maintaining a “buy” rating. This implies upside potential of approximately 92% relative to the closing price on October 6. The analyst noted that he is no longer factoring in the value of firmonertinib for unconfirmed indications and, instead, is factoring in the potential value of ARR-217 for metastatic colorectal cancer.

In addition, Jefferies and Truist lowered their target price for ArriVent shares from $45 to $18; Clear Street lowered its target price from $47 to $22; and Jones lowered its target price from $45 to $22. All five maintained their “buy” recommendation.

Despite the unsuccessful trial, Wall Street as a whole remains optimistic about ArriVent's prospects. All 12 analysts have issued a "buy" recommendation, with a target price of $30.3—112% above the stock's last closing price.