Gubra: Share price moves to all-time high as another partner project enters phase 1

Gubra’s stock was up 23 percent yesterday as Gubra announced that their partner Boehringer Ingelheim will bring one of its obesity product candidates co-developed by Gubra into phase 1. The candidate called BI3034701 is a long-acting triple agonist which according to Gubra will be part of the next generation of obesity products typically being associated with obesity products that has a higher part of the weight loss coming from reduced fat mass when compared to current obesity products in the market where a relatively higher part of the weight loss comes from reduced muscle and bone mass.

The phase 1 study is expected to be completed in the second half of 2025, and as part of the partnership agreement, Gubra will now receive a milestone payment (of an undisclosed amount) from Boehringer Ingelheim. Boehringer Ingelheim will have the responsibility to develop - and potentially commercialize - the product candidate globally going forward, but Gubra will still be eligible to receive additional huge financial milestones if the product candidate reaches additional developing and commercialization milestones.

Yesterday’s positive share price reaction comes on the back of a very strong share development since the beginning of the year where the stock is now up 380 percent when yesterday’s move is included. As we wrote last week when we updated our company guided DCF-model on Gubra, the market implied valuation of Gubra last week reflected a very high investor confidence in Gubra’s ability to bring its pipeline of obesity products candidates to the market via its partners as the DCF-model indicated that the potential of its obesity pipeline was beginning to look fully discounted. With the share price up a further 25 percent the last week, the ‘fully discounted’ assessment probably remains – even when considering the higher present value of the new phase1 project from a modelling perspective.

This is not to underestimate the importance which a third phase 1 candidate represent for a small biotech company like Gubra as it brings further validation of Gubra’s overall strength within obesity. It also supports the belief that Gubra’s pipeline, although being very early stage, perhaps has an edge from a medical advancement perspective that will make it possible to get a higher market that has been assumed in the DCF-model – even as Gubra and its partners will be latecomers to a future very crowded obesity marketplace. As mentioned in the update last week, somewhere between 125-150 product candidates within obesity is currently under development in various development phases globally by Big Pharma and biotechs combined, suggesting that Gubra must have an edge over other obesity product developers to support its valuation. With yesterday’s share price move, investors believe they have.

Disclaimer: HC Andersen Capital receives payment from Gubra for a Digital IR/Corporate Visibility subscription agreement. /Claus Thestrup 08:10 AM 02-07-2024.