The lucrative market for obesity drugs is dominated by two players right now, but Structure Therapeutics has the potential to enter the category with an oral GLP-1 medication, according to Piper Sandler. Analyst Yasmeen Rahimi initiated coverage of the clinical stage drugmaker with an overweight rating on Thursday, and set a $58 price target, which implies nearly 64% upside from where Structure shares closed Wednesday. “With 8 direct and 15 indirect catalysts in the next ~12-18 months, we see several near-term opportunities to further drive GPCR shares,” Rahimi wrote in a research note. The startup’s upsized initial public offering in February came after a long lull in biotechs going public. Structure’s ticker symbol is a nod to the company’s research, which focuses on G protein-coupled receptors, or GPCRs — a growing area of drug development. GSBR-1290 is Structure’s GLP-1R agonist that is being studied as treatment for type 2 diabetes and obesity. If successful, the drug could one day compete against Novo Nordisk’s blockbusters Ozempic and Wegovy and Eli Lilly’s Mounjaro. GPCR YTD mountain Structure Therapeutics shares year-to-date. GLP-1 medications mimic hormones in the gut to help regulate insulin levels and slow the rate at which the stomach empties. They also reduce food cravings and have proven highly successful in aiding weight loss, with few side effects. Still, the most effective drugs currently on the market in this category require a weekly injection, which is one reason why Structure’s oral medication could be an attractive option for patients, according to Rahimi. “Looking at injectable GLP-1 sales in 2022, Wegovy did $885M and Mounjaro did $483M, yet obesity is largely untapped at only ~2% penetration. Thus, we believe an oral agent for use in primary care settings is needed to unlock the major opportunity,” she said, citing statistics that more than 40% of the U.S. adult population is obese , which is potentially more than 130 million patients. Structure is expected to provide more detail about how early-stage clinical trials are going for GSBR-1290 in the fourth quarter. Investors will be looking to see how patients tolerate the drug and the amount of weight they are able to lose while taking the medication. Separately, the analyst said Structure’s other early stage drug candidate, LTSE-2578, provides further upside as investors have largely overlooked the opportunity it provides. It is being investigated as a treatment for idiopathic pulmonary fibrosis (IPF), a chronic lung disease. “LTSE-2578 is more potent in vivo and in vitro activity, which should translate to clinical benefit,” said Rahimi. ” [W]e find it clear that LTSE2578 has the most optimal and potentially best-in-class profile that delivers strong activity across several parameters based on preclinical IPF models.” Structure, which changed its name from ShouTi Inc. in August 2022, trades on the Nasdaq as an ADR. The company is headquartered in San Francisco, but has R & D operations in Shanghai.
