Our 12-month target price for ARVN is $9.50, derived using a discounted cash flow (DCF) analysis. We use a weighted average cost of capital (WACC) of 12% and a -50% terminal growth rate post 2037. We explicitly model cash flows through 2037. Arvinas' issued and pending patents are expected to begin expiring in 2036 for bavdeg and 2037 for vepdeg. Additional pending patents and patent extension programs such as Hatch-Waxman could extend Arvinas' patent protection.

We rate ARVN High Risk given the high stock price volatility seen for small/mid-cap biotech companies. We note the following sources of risks could disprove our target price and Neutral thesis.
Upside risks include: 1) Market uptake for vepdeg in 2L+ ESR1m mBC exceeds expectations, and/or 2) initial data from early-stage PROTAC programs exceed expectations.
Downside risks include: 1) Vepdeg fails to capture meaningful share in 2L+ ESR1m mBC given competitive dynamics, 2) Ph1/2 data for the AR degrader programs do not translate into a meaningful benefit over SOC in the ARV-766 pivotal study being operationalized by Novartis; and 3) unexpected safety signals are observed with one or more of Arvinas’ PROTAC programs in the clinic or in the commerical setting.