On Tuesday, Evercore ISI adjusted its outlook on 89bio Inc . (NASDAQ:ETNB), reducing the biopharmaceutical company's price target to $33 from the former $37 while sustaining an Outperform rating. The revision reflects an alignment of 89bio's projected expenses with those of a comparable company in the sector, Madrigal Pharmaceuticals (NASDAQ:MDGL), which has recently initiated the commercial launch of its drug Rezdiffra.
The firm stated that the new price target represents a potential upside of more than 2.5 times from the current stock price. This update comes as 89bio is actively progressing with its Phase 3 clinical studies for Pegozafermin, a treatment for non-alcoholic steatohepatitis (NASH). The Phase 3 trial for patients with F2-F3 stage NASH began in the first quarter, while the study for those with F4 stage NASH started on Tuesday.
89bio is also conducting a Phase 3 study for severe hypertriglyceridemia (SHTG), with results expected in 2025. The company is reported to have $562 million in cash reserves, but it is noted that additional funds will be necessary to see the Phase 3 trials to completion for both NASH and SHTG conditions.
The firm's update comes at a critical time for 89bio as it moves into what the analyst describes as "execution mode," indicating a period of significant activity and development for the company's clinical programs. The financial adjustments in the model are part of ongoing evaluations by investment firms to provide their clients with the latest insights into the biotech sector's evolving landscape.
InvestingPro Insights
The latest analysis from Evercore ISI on 89bio Inc. (NASDAQ:ETNB) comes at a pivotal moment for the biopharmaceutical company, as it advances its clinical trials for potential treatments in NASH and SHTG. To complement this analysis, recent data and tips from InvestingPro provide additional insights into the company's financial health and market performance. With a market capitalization of $894.31 million and a negative P/E ratio of -4.46, the company shows significant investment in research and development, which is common in the biotech sector. Notably, 89bio holds more cash than debt on its balance sheet, indicating a strong liquidity position to support ongoing clinical trials.
However, InvestingPro Tips suggest caution, highlighting that 89bio is rapidly depleting its cash reserves and has weak gross profit margins. Analysts have revised their earnings downwards for the upcoming period and do not anticipate the company will be profitable this year. These factors could be crucial for investors considering the potential risks and rewards associated with 89bio's stock. For a more comprehensive analysis, there are 2 additional InvestingPro Tips available that delve deeper into the company's financial nuances.
Investors seeking further guidance can utilize the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where they can access the full list of tips and data metrics to inform their investment decisions.
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