Chinese biotech ArriVent’s lung cancer drug fails in trial; stock plummets 47%

ArriVent BioPharma shares lost almost half their value in trading on Tuesday after the company published what it described as “disappointing” trial results for its lung cancer drug candidate. ArriVent is reviewing the data to determine the next steps for the drug’s development, while several analysts have already cut their target prices on the stock.

ArriVent fell 47% on the Nasdaq on Tuesday to $15.09 per share. The biotech stock rebounded after trading began Wednesday and was up 5% as of this writing. The company reported disappointing results from a phase III clinical trial of firmonertinib, its drug for non-small cell lung cancer.

ArriVent said firmonertinib failed to meet the phase III trial’s primary endpoint of improving progression-free survival in patients with lung cancer and certain EGFR mutations. An independent review committee found the drug did not produce a statistically significant improvement in the measure versus standard chemotherapy.

Median progression-free survival was 11 months among patients receiving the higher dose of firmonertinib versus 9.5 months in the chemotherapy group. The figure was 8.4 months with the lower dose. The trial also yielded some positive results: at the higher dose, tumors shrank in 60% of patients versus 33% in the chemotherapy group.

“These disappointing results are not what we hoped for,” ArriVent CEO Bing Yao said in the press release. “We... are evaluating the full FURVENT dataset as we determine the most appropriate development path for firmonertinib.”

Firmonertinib is an oral drug that blocks a protein promoting tumor growth. The drug is already approved in China for certain groups of patients.

ArriVent planned to bring drugs developed in China to Western markets through licensing agreements. The company obtained the rights to develop and commercialize firmonertinib outside of China from Chinese drugmaker Allist in 2021. ArriVent now has seven development programs, including a study of firmonertinib as a first-line treatment for patients with PACC mutations in the EGFR gene, which can drive lung cancer. Another of the company’s candidates, ARR-217, is intended to treat gastrointestinal tumors and has advanced to phase I clinical trials.

Several analysts cut their target prices following the failed trial of firmonertinib. BTIG analyst Jeet Mukherjee lowered his target price on ArriVent BioPharma from $42 to $29 per share while maintaining a “buy” rating. That valuation still implies around 92% upside from the Tuesday close. Mukherjee said he had removed the value of firmonertinib in unproven indications from his model while adding the potential value of ARR-217 in metastatic colorectal cancer.

Jefferies and Truist also cut their TPs on ArriVent from $45 to $18 per share, while Clear Street lowered its TP from $47 to $22 per share and Jones from $45 to $22 per share. All maintained “buy” ratings.

Despite the failed trial, Wall Street remains upbeat on the stock, a consensus "buy" among 12 coverage analysts. Their average target price is $30.30 per share, implying 112% upside from the last close.