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On Thursday, Morgan Stanley initiated coverage on Arcellx Inc. (NASDAQ: ACLX), assigning the biotechnology firm an Overweight rating and setting a price target of $81.00 per share. The coverage comes as Arcellx’s Phase 1 data in multiple myeloma has shown promise, indicating a potential best-in-class profile for its CAR-T therapy in this late-line indication, with preliminary Phase 2 data expected in the second half of 2024.
Arcellx’s lead asset, ddBCMA (also known as anito-cel), incorporates a patent-protected D-domain as the extracellular binding domain. This proprietary synthetic binding domain is central to the company’s broader platform and is believed to offer several advantages. These include high transduction efficiency and stability, which could lead to a best-in-class profile and scalable manufacturability for the therapy.
Morgan Stanleys analysis suggests that the differentiated design of Arcellx’s D-domain could position its BCMA-targeting CAR-T therapy ahead of competitors in terms of efficacy and production scalability. The assessment of ddBCMA’s potential is reflected in Morgan Stanley’s projection of approximately $5 billion in unadjusted worldwide peak sales across multiple treatment lines. This forecast stands in contrast to the unadjusted worldwide peak sales of approximately $8 billion for Carvykti, as per VA consensus.
In calculating the price target, Morgan Stanley has applied a blended probability of success (PoS) of 60% for the ddBCMA program. This PoS reflects a higher confidence in the therapy’s success in late-line treatments, with a more conservative outlook for its application in earlier lines of therapy. The anticipation of further data in the latter part of 2024 will likely provide additional insights into the therapy’s efficacy and market potential.
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