Analyst Flags Septerna As Undervalued Biotech Play With Significant Upside

On Monday, HC Wainwright initiated coverage on Septerna, Inc. SEPN, citing a next-generation drug design platform aimed at hitherto-undruggable targets.

Septerna is working on G protein-coupled receptor (GPCR) drug discovery powered by its proprietary Native Complex Platform. Its industrial-scale platform aims to unlock the full potential of GPCR therapies.

It has led to the discovery and development of its deep pipeline of oral small molecule product candidates focused initially on treating patients in three therapeutic areas: endocrinology, immunology and inflammation, and metabolic diseases.

Also Read: Novo Nordisk Inks $2.2 Billion Deal With Septerna To Develop Oral Weight Loss And Diabetes Drugs

Analyst Raghuram Selvaraju, in his report, highlighted several compelling factors for investors.

He pointed out that “Septerna trades at a discount to its most recently reported cash position and upfront cash from a recently-inked partnership.”

This, he argues, makes Septerna “a risk-mitigated opportunity with multiple shots on goal and catalysts constituting key value inflection points slated to accrue over the next six to 12 months.”

HC Wainwright has initiated coverage on the biotechnology firm with a Buy rating and a price forecast of $26.

The company’s most advanced drug candidate, SEP-631, is a selective oral small molecule MRGPRX2 negative allosteric modulator (NAM) in development for mast cell diseases, including chronic spontaneous urticaria (CSU).

Wainwright believes SEP-631 could offer a distinct treatment option for CSU patients. This is due to its selective inhibition of mast cells, convenient oral administration, and potential for combination therapy.

Selvaraju further noted that if SEP-631 can replicate the efficacy of Novartis AG NVS/Roche Holdings AG’s RHHBY Xolair (omalizumab) – an anti-IgE monoclonal antibody that generated nearly $3.9 billion in sales in 2023, it “could readily achieve blockbuster status based on an enhanced convenience profile.

Further solidifying its position, Septerna recently announced an exclusive global collaboration and license agreement with Novo Nordisk A/S NVS in May.

This significant pact covers the discovery, development, and commercialization of oral small-molecule medicines for obesity, type 2 diabetes, and other cardiometabolic diseases, with four development programs initially commencing.

HC Wainwright underscored the financial implications of this partnership, stating, “given the size of the upfront and near-term milestone payments, we feel that Septerna’s implied enterprise value is either negligible or actually negative, further mitigating risk and underscoring the extent to which the company appears undervalued.”

Price Action: SEPN stock is trading higher by 0.38% to $10.51 at last check Monday.

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