Gubra (One-pager): Very high investor confidence in Gubra’s ability to bring obesity products to the market
Gubra’s share price was up almost 15 percent on Thursday following media stories about Gubra being mentioned by famous German finfluencer. Friday, competing obesity drug developer Zealand Pharma announcing positive weight loss data from its Amylin analog resulting in positive read over to Gubra regarding their Amylin analog product candidate Gubamy leading to another more than 10 percent increase in the Gubra share price.
The last two days of strong share price performance is just the latest in the massive re-rating of the Gubra stock since February this year. Year-to-date the stock is up almost 300 percent.
A huge re-rating of a stock is typically enough in itself to revisit our company guided One-Pager model, but three more things has also changed since our last One-Pager on Gubra back in March.
So far, the model has used a market size estimate for the total obesity market in 2030 of USD 54 billion according to the Gubra prospectus, but it is becoming increasingly clear that this number is way to small as most analysts are now predicting the obesity market to grow to at least USD 100 billion a year in 2030 and some analysts are now talking about USD 150 billion. This will of course increase the value potential of most obesity product candidates including Gubra’s candidates – all things being equal.
But the bigger market potential comes with a huge influx of new obesity product candidates to compete for a piece of the pie questioning the ‘all things being equal’ assumption. It is far from being the same as it used to be. In fact, current estimates of registered obesity related product candidates in anything from pre-clinical to phase 3 across the industry ranges from 125-150 product candidates according to different sources. So, the gigantic future obesity market will likely see an extreme competitive dynamic in the coming years making it difficult to argue for newcomers in early phase or pre-clinical product development – like Gubra - to grab a big chunk of the market. Of course, it can happen, but a more appropriate assumption will probably be that the increased competitive market dynamic will lead to a lot of small niche market positions of low single digits percentages for the late comers to the market. The market will be big enough to make it interesting to try and get even a small share, but the big market shares we see from the first movers like Novo Nordisk and Eli Lilly will most likely not be replicated by others in the future. This means that we have revisited the model and lowered the peak market share to low single digit peak penetration rates.
It is not all bad as witnessed by the recent announcement by Gubra of its new product candidate, UCN2, to compete in the ‘healthy weight loss’ category where the patients primarily loose fat mass and not muscle and bone mass. We have added this to our model but with a lower potential than GUBamy.
Combined, even though the bigger markets size and UCN2 has been included in the model, the strong share price appreciation has more than out weighted these positives indicating that the marked has now implicitly almost fully discounted the company guided value potential of Gubra’s obesity-based pipeline. Of course, there are still some upside potential factors to consider, like new product candidates, higher peak markets share than assumed or higher royalty rates than guided from its partnerships, but generally the current implicitly calculated probability of success suggest a lot is discounted leaving little room for errors going forward at these share price levels.
HC Andersen Capital receives payment from Gubra for a Digital IR/Corporate Visibility subscription agreement. /Claus Thestrup 1:30 PM/ 24-06-2024.
Gubra
Gubra er en medicinalvirksomhed. Virksomhedens aktiviteter er fokuseret på de tidlige stadier af lægemiddeludvikling. De udfører hovedsageligt forskning og udvikling inden for stofskifte- og fibrotiske sygdomme.Virksomhedens produktportefølje omfatter flere brands og lægemidler, og aktiviteterne foregår på globalt plan med den største tilstedeværelse i Nordamerika og Norden. Hovedkontoret ligger i Hørsholm, Danmark.
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