After a Massive Gain, Is There Still Room for Adaptimmune (ADAP) Stock to Soar?

In a single day, the talk on the Street has zeroed in on one stock, oncology-focused cell therapy company Adaptimmune Therapeutics (ADAP). Following its presentation of promising data at the 38th annual J.P. Morgan Healthcare Conference, shares took off, posting a whopping 200% one-day gain.

The data revealed that its MAGE-A4 (ADP-A2M4 and next-generation ADP-A2M4CD8) and AFP (ADP-A2AFP) therapies, part of its SPEAR T-cell platform, demonstrated initial solid tumor responses in four indications: gastro-esophageal junction, head and neck, liver cancers and melanoma.

“These responses demonstrate that our proprietary SPEAR T-cell platform is clearly active and can overcome the challenges of treating a range of solid tumors with a T-cell therapy product,” CEO Adrian Rawcliffe commented.

While only two of the responses were confirmed, the implications are significant. The efficacy of SPEAR T-cells in sarcoma has already been demonstrated, but some have been skeptical of the TCR/cell therapy approach in treating other forms of cancer based on a lack of responses among patients with more common solid tumors.

As a result, the news was a pleasant surprise as investors had grown increasingly concerned about ADAP’s ability to address markets other than sarcomas.

Weighing in, Cowen & Co. analyst Marc Frahm believes that thanks to the new data, the assumption that “sarcomas are uniquely susceptible to TCR therapy” should be reevaluated. Noting that the results were definitely unexpected, he argues that they highlight the potential of MAGE-A4 antigens.

“It appears possible that the prior lack of responses may not have been a sign of complete insensitivity but rather a sign that the activation hurdle is merely a little higher outside of sarcoma. We are therefore hopeful that MAGE-A4’s utility may ultimately expand beyond subsets of sarcoma,” Frahm wrote in a note to clients.

However, the four-star analyst tells investors that the key takeaway is ADP-A2AFP’s impressive performance. He stated, “The first hepatocellular carcinoma (HCC) patient treated at a dose of 5B cells within the Phase I trial of ADP-A2AFP has achieved a confirmed PR with 100% shrinkage of target lesions. Importantly, this patient was heavily pretreated as they had previously received treatment with a PD-1 inhibitor, sorafenib, and lenvatinib.” As the candidate has already delivered a dosing response, Frahm thinks that “robust efficacy may be possible in HCC.”

All of the above factors played into the analyst’s conclusion that substantial upside for ADAP shares is in sight. To this end, Frahm reiterated an Outperform rating without attaching an exact price target. (To watch Frahm’s track record, click here)

With respect to other Wall Street analysts, only one other review of ADAP has been issued in the last three months. As that call was a Hold, the consensus rating lands at a Moderate Buy. However, it remains to be seen if the data will prompt other analysts to throw their opinions into the mix. (See Adaptimmune price targets and analyst ratings on TipRanks)

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