Mar 24, 2023
Biotech 89Bio Tops $1 Billion Value on Liver Treatment Hopes
(Bloomberg) -- 89Bio Inc. is poised for its best week in more than five months after revealing promising new data for a treatment of a common liver disease tied to obesity.
Shares soared more than 30% this week, helping it top $1 billion in market value for the first time ever after an experimental medicine dubbed pegozafermin hit its main goal in a mid-stage trial for non-alcoholic steatohepatitis. The biopharmaceutical firm took advantage of the rapid rally, announcing Friday that it was raising $275 million in an upsized secondary offering.
With potential revenue for NASH drugs expected to be in the billions, drugmakers have been chasing after treatments for the liver disease for years. The space has been littered with failures but results for 89Bio’s drug this week bolstered investor hopes once again and strengthened one Cantor Fitzgerald analyst’s thesis that the space was due for a turnaround.
“Conversations have shifted beyond just focusing on clinical readouts, to now seriously considering and asking what commercial opportunities and the markets might look like as some of these companies near pivotal development or commercialization,” Cantor analyst Kristen Kluska wrote in a note Friday.
Investors are now looking at pegozafermin, and drugs like it, as the front-runners in NASH, she said. At least six different analysts, including Kluska, boosted their 12-month price target on 89Bio this week following the study results. The average analyst target suggests the stock could more than double over the next year.
Still, 89Bio has yet to prove the drug works in large-scale studies and competitors are many. Madrigal Pharmaceuticals Inc. is expected to file for US regulatory approval of its medicine soon while Viking Therapeutics Inc. and Hepion Pharmaceuticals are expected to release their own data this year.
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