William Blair & Company initiated research coverage of 9 Meters Biopharma, Inc. (NMTR $0.68). Created by the integration of three companies in May 2020, 9 Meters Biopharma is a clinical-stage biotechnology company focused on therapies for unmet needs in gastrointestinal disorders.
Analyst Tim Lugo said, "We believe 9 Meters has a promising pipeline spanning several clinical-stage assets for GI disorders. The pipeline includes two drug candidates undergoing clinical trials for celiac disease, or CeD, and short bowel syndrome, or SBS, along with two additional candidates for yet-to-be-disclosed indications. The most advanced candidate, larazotide acetate, is an oral, gut restricted, tight junction regulator in Phase III development as an adjunct to a gluten-free diet for the treatment of CeD. CeD affects about 1% of the population, yet has no approved therapies, and as the only therapy in Phase III development, larazotide has a significant opportunity here. The second clinical asset is NM-002, a long-acting injectable GLP-1 (glucagon-like peptide-1) agonist for the treatment of SBS, a debilitating and underserved orphan indication. Top-line data from the Phase I/II study of NM-002 in SBS is expected in fourth quarter 2020 and top-line data from the Phase III study of larazotide in CeD is expected in second half 2021."
Lugo continued, "With a pipeline addressing both one of the largest indications in gastroenterology and rare-disease markets, management plans to partner larazotide if clinical development in CeD proves successful. As the first pharmacotherapy in the indication, we model peak sales of $1 billion, with 9 Meters receiving 15% royalties on those sales, in addition to upfront payments and milestones that provide nondilutive financing through approval. For NM-002, the company expects to initiate a Phase III study in the second half of 2021, leading us to see commercialization in 2024. We model the company to break even in 2024 following the launch of NM-002. We believe the overall economics of a partnership for larazotide will drive financials in the near term as upfront and milestone payments provide nondilutive capital to support operations until an NM-002 launch. Thereafter, we see larazotide providing a steady stream of royalties, although there is potential for upside depending on the terms of any partnership."
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Current Ratings Distribution (as of 9/22/20)
Coverage Universe
Outperform (Buy): 71%
Market Perform (Hold): 29%
Underperform (Sell): 1%
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Outperform (Buy): 21%
Market Perform (Hold): 8%
Underperform (Sell): 0%
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