Tempest Weighs M&A, Analyst Sees A "Broken Story" Despite Phase 2 Liver Cancer Study Success

Tempest Therapeutics, Inc. (NASDAQ:TPST) said on Thursday it had retained MTS Health Partners as a financial advisor. The company plans to explore strategic alternatives to advance its clinical-stage programs and maximize stockholder value.

Strategic alternatives may include M&A, partnerships, joint ventures, licensing arrangements or other strategic transactions.

“Notwithstanding the positive randomized data set from the amezalpat Phase 2 and its blockbuster potential in first-line HCC, as well as the potential of TPST-1495 as it moves towards a Phase 2 in FAP, the capital markets have been unavailable to support the next stage of advancement,” said Stephen Brady, president and chief executive officer of Tempest. 

Also Read: Why Is Small-Cap Tempest Therapeutics Stock Trading Higher On Thursday?

On Thursday, Scotiabank downgraded Tempest Therapeutics from Sector Outperform to Sector Perform while raising the price target from $7 to $9.

In October 2024, the company entered into an agreement with Roche Holdings AG (OTC:RHHBY) to advance the evaluation of amezalpat (TPST-1120) in combination with atezolizumab (Tecentriq) and bevacizumab, the current standard of care for unresectable or metastatic hepatocellular carcinoma (HCC), into a Phase 3 trial for the first-line treatment of liver cancer.

Under the agreement, Roche will supply atezolizumab globally and Tempest will sponsor and lead the pivotal study.

Analyst George Farmer writes that Roche appears to have no financial interest in the Phase 3 evaluation of amezalpat in combination with atezo/bev, despite the quality of results that Tempest Therapeutics presented last June.

Other potential partners with deep pockets, like AstraZeneca and Bristol Myers Squibb & Co, with their own cancer immunotherapies, are uninterested.

“Lack of partner interest in this program, including negligible BD engagement from Roche beyond promise of providing a free Phase 3 supply of atezolizumab, indicates to us that this is probably a broken story that cannot be repaired without additional early-stage clinical exploration,” Farmer writes.

“We think the company may ultimately attract a buyer, but we would not expect a significant transaction premium above the current trading range,” Farmer adds.

HC Wainwright downgraded Tempest Therapeutics from Buy to Neutral while maintaining the price target of $16.

TPST Price Action: Tempest Therapeutics stock is down 6.93% at $6.65 at publication on Thursday.

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