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NovoCure takes off on Wells Fargo's optimism for LUNAR program

NovoCure (NASDAQ:NVCR) was upgraded by Wells Fargo on Tuesday on hopes of a positive outcome from the company's LUNAR trial, which is studying the efficacy of tumor treating fields in non-small cell lung cancer patients.

Wells Fargo in its Nov. 29 report changed rating on stock to "overweight" from "equal weight", while also increasing its price target to $89 from $74, citing a risk/reward scenario ahead of top-line results of the LUNAR program.

The stock was +6.8% at $74.80 by 1:33 pm ET on the Nasdaq.

"We see upside to NVCR shares if the LUNAR top-line is positive as it should be a positive read-through to and increase the PoS (probability of success) of the other studies/indications" - Wells Fargo on NVCR

The bank expects that the LUNAR study will show TTFields plus IO or docetaxel to be superior to docetaxel alone in the primary endpoint; however, it is less certain about superiority over IO alone given the efficacy of IOs.

On the secondary endpoints, the bank said it believes TTF plus docetaxel should show superiority, compared to just docetaxel.

Besides LUNAR, clinical milestones from other programs over the next 12-18 months will serve as important catalysts to stock movement, Wells Fargo analyst Larry Biegelsen wrote.

The report mentioned that final phase 3 data from INNOVATE-3 in ovarian cancer is expected around mid-2023 and brain metastasis in METIS in early 2024, and the bank believes there is a "reasonable chance" for a positive study, especially if LUNAR is positive.

NovoCure stock is down 6.5% this year as of last close, compared to a 16.6% decline in the S&P 500 index.

In a separate press release, the company announced that Health Canada approved its Optune treatment for newly diagnosed and recurrent glioblastoma.