Raymond James Keeps Bullish View on Biotech G1 After 43% Slide

(Bloomberg) -- Raymond James is keeping its strong buy rating on G1 Therapeutics Inc. after the stock plunged 43 percent Thursday on what analyst Dane Leone called “misinterpretations” of clinical data by investors.

The shares fell after a trial of trilaciclib in small cell lung cancer met both of its primary endpoints showing myelopreservation benefits when combined with chemotherapy. Some investors expected the drug to show better clinical outcomes than chemotherapy, according to Leone, but that wasn’t part of his thesis.

He kept his $66 price target on the stock, which is on the low end of analyst expectations but almost four times higher than the current value.

“Our stock call and our price target are not dependent on this drug showing a benefit in response rate and progression free survival in small-cell lung cancer,” Leone said in a phone interview Friday. He started coverage of the stock on Wednesday within minutes of the data being released.

A call with a lung cancer doctor on Thursday supported the view that “there seems to be nothing nefarious around the comparative response rates or current clinical dataset for trilaciclib” that could hurt the company’s talks with regulators in the first half of next year, Leone said in a separate research note.

Other analysts have also defended their calls on G1 Therapeutics, calling the drug “largely de-risked” and recommending that investors buy shares on weakness. All seven analysts tracked by Bloomberg have a buy rating and the average price target is $72. The shares rose 3.6 percent to $17.10 at 10:58 a.m. in New York.

To contact the reporter on this story: Catherine Larkin in Chicago at clarkin4@bloomberg.net

To contact the editor responsible for this story: Arie Shapira at ashapira3@bloomberg.net

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