Arcellx (ACLX) and Legend Biotech (LEGN) traded higher on Tuesday after the U.S. FDA issued draft guidance on the use of minimal residual disease and complete response as study endpoints that can support accelerated approval of treatments for multiple myeloma, a rare blood cancer.
Legend (LEGN) has a partnership with Johnson & Johnson (JNJ) to market and develop Carvykti, a one-time cell therapy for relapsed or refractory multiple myeloma, while Arcellx (ACLX) is advancing its MM therapy, anito-cel, with Kite Pharma, a unit of Gilead Sciences (GILD).
In a research note, analysts from RBC Capital Markets viewed the FDA’s draft guidance positively. They noted that due to a requirement for large sample sizes, the regulator has suggested that the use of overall response rate (ORR) could be infeasible, and MRD negativity could be used as an acceptable surrogate for progression-free survival (PFS) and overall survival (OS) instead.
Pointing out that Legend’s (LEGN) CARTITUDE-6 trial for Carvykti had already been designed with MRD negativity as an endpoint, Jefferies thinks that the guidance is a “clear positive” for the company, on which it has an Outperform rating and a $66 per share target.
The analysts also pointed out that the update has competitive readthroughs with anito-cel from Gilead (GILD) and Arcellx (ACLX), expected to reach the market in the second-line to fourth-line settings based on MRD negativity.
“However, given we think LEGN shares are trading at a significant discount, this doesn’t necessarily change our bigger picture on the setup,” Jefferies wrote.