Mirati (MRTX) Down 17.6% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Mirati (MRTX). Shares have lost about 17.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Mirati due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Q1 Earnings & Sales Beat Estimates

Mirati reported a loss of $3.18 per share for first-quarter 2023, narrower than the Zacks Consensus Estimate of a loss of $3.47 as well as the year-ago quarter’s loss of $3.40 per share.

Mirati reported $7.2 million in revenues for the first quarter, beating the Zacks Consensus Estimate of $5 million. Mirati had recorded revenues of $1 million in the year-ago quarter.

Quarter in Detail

First-quarter revenues included $6.3 million as product revenues from Krazati/adagrasib, Mirati’s newly approved cancer drug.The first quarter of 2023 was the first full quarter of Krazati revenues. In fourth-quarter 2022, Krazati generated initial sales of $0.7 million which was mostly associated with inventory in the channel.

License and collaboration revenues were $0.9 million in the quarter compared with $0.7 million in the year-ago quarter.

Research and development expenses declined 3.3% from the prior-year quarter’s level to $126.7 million. This decrease was due to a reduction in clinical development costs for sitravatinib as enrollment was completed in the phase III SAPPHIRE study in 2022 and lower clinical manufacturing costs to support ongoing clinical studies.

Selling, general and administrative expenses surged 36.1% from the year-ago quarter’s level to $73.5 million due to an increase in commercial-related costs to support the marketing and sales of Krazati and higher headcount-related costs.

Cash, cash equivalents and short-term investments as of Mar 31, 2023 were $902.3 million compared with $1.1 billion as of Dec 31, 2022.

Mirati expects the 2023 net cash burn to annualize within a range of $525-$580 million. Mirati’s current cash runway is expected to fund operations into 2025.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 5.48% due to these changes.

VGM Scores

Currently, Mirati has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Mirati has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Mirati is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Sarepta Therapeutics (SRPT), a stock from the same industry, has gained 5.5%. The company reported its results for the quarter ended March 2023 more than a month ago.

Sarepta Therapeutics reported revenues of $253.5 million in the last reported quarter, representing a year-over-year change of +20.2%. EPS of -$0.97 for the same period compares with -$1.20 a year ago.

For the current quarter, Sarepta Therapeutics is expected to post a loss of $2.07 per share, indicating a change of +21.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.7% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Sarepta Therapeutics. Also, the stock has a VGM Score of F.

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