Shares of Blueprint Medicines (BPMC) are sliding after the company reported data over the weekend regarding its early-stage candidate in RET-altered tumors. This morning, both Wedbush and JMP Securities raised their price targets on the stock, while Morgan Stanley analyst Matthew Harrison upgraded competitor Loxo Oncology (LOXO) to a buy-equivalent rating as he believes the initial Blueprint data was at the lower-end of Loxo investors' expectations.

PHASE 1 ARROW DATA: Over the weekend, Blueprint Medicines announced proof-of-concept data from the ongoing Phase 1 ARROW clinical trial of BLU-667 in patients with RET-altered solid tumors. The data from the dose escalation portion of the ARROW trial showed "broad and robust" clinical activity for once-daily dosing of BLU-667 across multiple tumor types and RET genotypes, including in patients whose disease had progressed on prior multi-kinase inhibitor therapy, the company said. As of the data cutoff date of April 6, 2018, the data showed radiographic tumor reductions in 84% of patients with RET-altered solid tumors with measurable target lesions. In patients evaluable for response, preliminary overall response rates were 50% in patients with NSCLC and 40% in patients with MTC. As of the data cutoff date, one a day dosing of BLU-667 was well-tolerated, and most adverse events reported by investigators were Grade 1 or 2.

BLUEPRINT TARGET RAISED: Following the announcement, Wedbush analyst David Nierengarten raised his price target for Blueprint Medicines to $106 from $98, citing the "encouraging" dose escalation data from the study. The analyst reiterated an Outperform rating on the shares. Meanwhile, JMP Securities analyst Konstantinos Aprilakis also raised his price target on Blueprint Medicines to $109 from $97, highlighting that among all 53 enrolled patients, an "impressive" 41 patients remained on BLU-667 as of the data cutoff date. He reiterated an Outperform rating on Blueprint shares.

BUY LOXO ONCOLOGY: In a research note this morning, Morgan Stanley's Harrison upgraded Loxo Oncology, which is also developing a new targeted agent against cancers with RET alterations that include both lung and thyroid cancer, to Overweight from Equal Weight and raised his price target on the stock to $170 from $130. While acknowledging that competitor Blueprint's data was good, the analyst argued that it was at the lower end of Loxo investors' expectations, offering the opportunity for Loxo to differentiate its own RET inhibitor with data expected in June. Harrison sees the potential for LOXO-292 differentiation on both safety and efficacy. Given the news, the analyst increased his LOXO-292 market share projection to 60% from 50% and increased his probability of success to 70% from 50%. Also commenting on what Blueprint's data may mean for Loxo, Stifel analyst Stephen Willey told investors he believes that while BLU-667 looks like "a sufficiently viable asset for RET-altered tumors," the data has left the competitive window "wide-open" for Loxo ahead of preliminary LOXO-292 data expected at the ASCO meeting. Loxo's data now potentially could shift sentiment on what consensus has been presuming to be an over $1B opportunity equally-shared between the two companies, Willey added. The analyst reiterates a Buy rating on Loxo's shares.

PRICE ACTION: In morning trading, shares of Loxo Oncology have gained about 3% to $126.84, while Blueprint's stock has dropped nearly 14% to $85.31.