Analyst Projects Over 130% Upside In This Biopharma

NGM Biopharmaceuticals Inc NGM, which went public about a year back, has seen its shares trade mostly below the IPO price of $16. An analyst at Raymond James said the stock deserves to trade at a much higher valuation.

The NGM Analyst

Steven Seedhouse initiated coverage of NGM shares with a Strong Buy and $31 price target. 

The NGM Thesis

NGM has created a "sizable novel biologic pipeline," and among its pipeline candidates, aldafermin, MK-3655 and NGM621 drive Raymond James' thesis and model, Seedhouse said in a Monday initiation note. (See his track record here.)

Aldafermin, which is being evaluated in non-alcoholic steatohepatitis, or NASH, with fibrosis, seems comparable to Intercept Pharmaceuticals Inc's ICPT Ocaliva — the frontrunner in the NASH race — on fibrosis, but with better NASH resolution and no pruritus in a Phase 2b study, the analyst said.

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"Aldafermin may ultimately become the first therapy to achieve both FDA-recommended co-primary endpoints in NASH," he said. 

Seedhouse said he expects the outcome of Ocaliva's June 9 AdCom to provide key insight into the potential downstream approvability/label for aldafermin in NASH.

The analyst is also bullish about MK-3655, which is a potent insulin sensitizer targeting Type 2 diabetes patients with NASH.

"Given positive results on T2DM biomarkers and liver fat reduction in Phase 1b, MK-2655 looks like a promising candidate for F0/F1 NASH with diabetes," he said. 

NGM Price Action

NGM shares were trading 4.63% higher at $14.02 at the time of publication Tuesday.