Day One Biopharmaceuticals Inc. (DAWN) is a clinical-stage biopharmaceutical company focused on discovering and commercializing tailored therapeutics for patients of all ages suffering from life-threatening illnesses. The company’s lead product candidate Tovorafenib (DAY101), is an investigational oral, brain-penetrant, highly selective type II pan-RAF kinase inhibitor.

The stock recently gained traction following an insider trading activity worth more than $40 million on June 17. Shares of this $1.3-billion biopharmaceutical business have risen 18.9% since then. On June 17, Non-Executive Director Michael Gladstone and Atlas Venture Opportunity Fund II, L.P. each purchased 766,667 shares of the company’s stock at an average price of $15.00 per share.

Also, AI Day1 LLC, which controls more than 10% of DAWN, purchased 1.2 million shares for $15.00 per share. In addition, Piper Sandler raised DAWN’s price target from $35.00 to $40.00 and upgraded the company to “overweight.”

Here’s what could shape DAWN’s performance in the near term:

Latest Development

This month, DAWN released positive preliminary data from the first 22 RAO-evaluable patients enrolled in the ongoing, open-label, single-arm, pivotal Phase 2 FIREFLY-1 clinical study. FIREFLY-1 is testing tovorafenib (DAY101) as once-weekly monotherapy in patients aged six months to 25 years with recurrent or advanced pLGG, the most common brain tumor diagnosed in children, for which no licensed medicines are available, and no standard of care exists.

The data demonstrated an overall response rate (ORR) of 64% and a clinical benefit rate (CBR) of 91% in the first 22 evaluable patients treated with tovorafenib monotherapy.

Strong Momentum

The company’s shares have gained 82.1% over the past three months and 7.6% over the past six months to close yesterday’s trading session at $17.90. In addition, the stock is currently trading above its 50-day and 200-day moving averages of $10.16 and $15.28, respectively, indicating an uptrend.

Impressive Earnings Estimates

Street expects DAWN’s EPS to rise 90.3% in the second quarter ending June 2022 and 56.7% in the current fiscal year.

Robust Growth

DAWN’s working capital growth of 66.5% year-over-year compares to the negative industry average of 12.1%. In addition, its year-over-year CAPEX growth of 275% is 1262.2% higher than the industry average of 20.2%.

Consensus Rating and Price Target Indicate Potential Upside

Each of the three Wall Street analysts that rated DAWN rated it Buy. The 12-month median price target of $37.50 indicates a 109.5% potential upside. The price targets range from a low of $37.00 to a high of $40.00.

Bottom Line

DAWN is an emerging company with clinical initiatives, remarkable technology, and clinical reasoning. Given analysts’ solid earnings estimates and price targets, the stock could witness further upside in the near term. In addition, the recent insider buying activities could mean better prospects ahead for the stock.

DAWN shares were trading at $18.56 per share on Friday afternoon, up $0.66 (+3.69%). Year-to-date, DAWN has gained 10.15%, versus a -20.25% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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