What happened
Shares of Structure Therapeutics (GPCR -0.10%) were up more than 14% as of 2 p.m. ET on Monday, just a few days after the clinical-stage pharmaceutical company's stock soared more than 32%. The carryover rally was due to increased awareness of the company's positive trial data for GSBR-1290, a drug to treat obesity.
So what
It's easy to see why investors are high on Structure stock right now. If GSBR-1290 is approved as a weight-loss and diabetes therapy, it would be in the same class of drug, a GLP-1 receptor agonist, that has been partially responsible for Novo Nordisk and Eli Lilly upgrading their sales predictions for this year. GLP-1 receptor agonists work by decreasing appetite levels by slowing down the rate a stomach empties itself of food, making subjects feel full longer. The class of drugs also helps the body regulate blood sugar levels.
On top of that, GSBR-1290 has one advantage over other approved GLP-1 receptor agonists, such as Novo Nordisk's Wegovy or Lilly's Mounjaro. GSBR-1290 is taken as a daily pill, rather than by injection, so that increased ease of use could propel sales for the therapy.
On Friday, two analysts upgraded their price targets for Structure based on the data. SVB Leerink raised its price target from $46 to $97, and Jefferies Financial Group increased its price target for the stock from from $50 to $79.
Now what
Investors should be wary of the stock getting overhyped. Bear in mind that Structure doesn't have any marketed products yet and it was only a phase 1b trial, so it could be years before GSBR-1290 gets approved by the Food and Drug Administration (FDA) as an obesity or diabetes therapy. The company has already benefited financially in one way, though, as it was able to raise $300 million in a private stock placement that it announced on Friday.
