JPMorgan Forecast Over 85% Upside for Two Biopharma Stocks Targeting Obesity and Chronic Conditions

This year's steady climb of the S&P 500 index has market experts forecasting a robust remainder of 2024. JPMorgan analyst Madison Faller recently highlighted that the S&P 500 has gained over 10% in 100 trading days, and whenever that has happened since 1950, "stocks have closed out the full year with an average return of about 25%."

"This time last year, the S&P 500 was up over 8% and later closed the year with a gain of almost exactly 25%," she added.

Her colleagues also had an optimistic outlook on two emerging biopharma stocks, with a "Buy" rating based on the analyst consensus.

Kyverna Therapeutics (NASDAQ: KYTX)

JPMorgan analyst Brian Cheng was overweight on Kyverna Therapeutics with a 12-month stock price target of $39 per share, implying a potential upside of 200%. The stocks of the biotech firm, which went public via an IPO in February, were trading at $13 after hours on May 31.

Kyverna Therapeutics was founded in 2018 to leverage cell therapies for treating autoimmune diseases. These progressive illnesses make managing symptoms difficult for patients over time and have long posed a challenge for the biotech industry.

Kyverna focuses on new chimeric antigen receptor T cell (CAR-T) therapies to reboot the immune system and initiate a treatment-free remission. The company's leadership of experts in the biotech space believe that CAR T-cell drug therapies, which have already showcased positive results in treating haematological cancers, can be leveraged to treat autoimmune diseases.

The firm's KYV-101 drug candidate is undergoing phase 1/2 clinical trials for treating lupus nephritis and systemic sclerosis and phase 2 trials for treating myasthenia gravis and multiple sclerosis. The CAR-T therapy has demonstrated high efficacy for several autoimmune diseases, and the company has treated 30 patients as of May 14 across the targeted illnesses.

"We believe Kyverna, armed with compelling clinical evidence to date, is at the forefront of deploying CAR-T cell therapies across multiple autoimmune indications. The evidence to date is compelling and consistent with the results seen from academic research... We anticipate early insights from a handful of pts – potentially from the Ph 1/2 KYSA-1 (US) and Ph 1/2 KYSA-3 (Germany) trials. We believe this will be an important milestone for the company as the data continues to mature beyond the initial set of named patient cases," Cheng had said, according to TipRanks.

For the quarter ended March 31, Kyverna had $369.8 million in cash and cash equivalents despite posting a $26.7 million loss as the firm raised $336.2 million in net proceeds via its IPO to further its R&D plans. Kyverna expects to release interim patient data and regulatory progress in the US and Europe in the upcoming quarters.

Although the stock value has declined since the IPO, the company focuses on the most important things, like delivering clinical results, even if it means raising funds. The analyst consensus average price target was $42.75, much higher than the JPMorgan forecast.

Structure Therapeutics (NASDAQ: GPCR)

JPMorgan analyst Hardik Parikh had a "Buy" rating on Structure Therapeutics with a 12-month target price of $65 per share, implying a potential upside of over 85% from $34.86 after hours on May 31.

The global biopharma company is involved in discovering and formulating therapeutic agents to treat obesity and chronic pulmonary illnesses. With the help of its structure-based drug discovery interface, it has developed two drug candidates, GSBR-1290 and ANPA-0073, at the human clinical trial stage. These candidates are small-molecule compounds for diseases like diabetes, obesity, and pulmonary fibrosis.

GSBR-1290, a selective oral GLP-1 receptor agonist that targets obesity and type 2 diabetes, has undergone Phase 2a trials, and results are to be released by the firm very soon.

Meanwhile, the ANPA-0073 oral capsules, developed using AI technology, target the apelin receptor for treating pulmonary arterial hypertension (PAH), obesity, and idiopathic pulmonary fibrosis (IPF). It has concluded its first-in-human single-ascending and multiple-ascending dose study, which found the drug was well-tolerated with a good safety profile and can help treat diseases like IPF, PAH, sepsis, and heart failure.

Parikh sees ample opportunity in the obesity treatment space. "We think the opportunity for oral GLP-1s is underappreciated and think this market could generate $30 billion in sales by 2035. GPCR's lead asset, [GSBR] 1290, is a pure-play option for this opportunity, and even a small share would support a substantial upside to the stock, by our estimates," he noted.

"We expect next-generation oral GLP-1s to gain meaningful share over time, and here, GPCR has some advantages over several other companies looking to enter the market (ex-LLY/Novo). These include 1) a small molecule formulation and 2) a slight time-to-market advantage, and we think 1290/Structure could be an attractive partnership opportunity for larger biopharma companies looking to participate in the T2D/Obesity market," Parikh added.

The company went public in the US early last year via American Depositary Shares (ADS) to raise gross proceeds of $185.3 million. A total of 10 analysts covering the stock had a "Buy" rating with an average 12-month stock price target of $75.70, over a 100% potential upside from current trading levels.

With the growing incidence of chronic illnesses, demand for treatment drugs continues to rise as the biopharma sector could become a $745.1 billion industry by 2030 from $448.1 billion in 2023.

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