Structure Therapeutics (GPCR -1.58%) might have something cooking that could one day unseat the likes of Novo Nordisk's (NVO 1.72%) Ozempic, a drug for type 2 diabetes, as well as its drug Wegovy, which is the same medicine but branded and indicated for treating obesity. This year, the biotech's stock is up by 33% thanks to new data from one of its pipeline programs that underlines the idea it could be competitive in the weight-loss market someday relatively soon.
Is the run-up mostly a result of the hype that seems to be the norm for anything weight-loss related, or is there a real chance of greatness lurking here? Let's dive in and analyze how it compares to the reigning champs.
How good is its candidate?
Structure's program for treating obesity is called GSBR-1290, and it's the biotech's most mature candidate. Per the results of its phase 2a clinical trials, GSBR-1290 might have what it takes to beat the anti-obesity medicines on the market today.
Rather than being formulated as a once-per-week shot like Wegovy or like Eli Lilly's therapy for weight loss called Zepbound, GSBR-1290 is a tablet intended for daily dosing. It uses the same mechanism of action as Wegovy and Ozempic, targeting the GLP-1 receptor. But it might be more effective.
After patients took the treatment for 12 weeks, they lost 6.2% of their body weight, on average, after adjusting for the very modest benefits experienced by another group of patients who were given a placebo. For reference, with Wegovy, patients lost 12.4% of their mass (adjusted for placebo) after 68 weeks of treatment. And for Zepbound, the story is very similar; patients lost 15% of their weight on average after 72 weeks of treatment.
So Structure's medicine appears to promote weight loss much faster than Novo Nordisk and Eli Lilly's medicines that are currently dominating the market.
Additionally, just 5.4% of patients treated with GSBR-1290 discontinued treatment during the trial as a result of the side effects. That's a touch higher than the 4.5% who discontinued treatment with Wegovy, but it still indicates that Structure's candidate is fairly well tolerated by patients. Nausea is the biggest issue, per company data.
If given a choice, it is still probable that many would choose to take it instead of Novo Nordisk's offering, as the superior convenience of the tablet format is also likely to be more comfortable for patients, as there won't be any need to travel to a skilled practitioner to get an injection. For now, the next step will be running a phase 2b trial, which is slated to start in the fourth quarter of this year.
Can it actually reach the market?
Structure's status as a pre-revenue biotech means that it has a finite amount of resources to use before it'll need to borrow more or go out of business regardless of how effective its lead candidate appears as of today.
At the end of Q1, it had just over $436 million in cash, equivalents, and short-term investments, whereas its research and development (R&D) expenses were just shy of $21 million for the period. It doesn't have anything in the way of long-term debt. So, it should have more than enough money on hand to fund GSBR-1290's remaining clinical trials and perhaps even a significant amount of the commercialization infrastructure that it'll need down the line.
Nonetheless, as of June 3, it proposed a new offering of its shares and pre-funded stock warrants. It's unclear what the gross proceeds of the offer will be at the time it closes, but management is likely looking to raise at least another year or two of cash runway.
In short, Structure is going to have even more money, so it will have even more time to iron out any kinks with its lead candidate. Right now, it can probably afford to run confirmatory clinical trials or even gather more data from new trials to allay concerns that regulators may have during the approval process, assuming it gets there.
The setup for Structure is fairly bullish today. With its efficacy data looking pretty good compared to its most dangerous competitors, GSBR-1290 will probably be able to find a sizable market share if it gets approved. Bumps in the road during the remaining clinical trials, especially regarding safety signals, could still do serious damage to its share price.
If you can accept that risk, and if you're looking to get exposure to anti-obesity drugmakers, this stock could be worth a modest purchase. Just remember that it will be at least a year or so before it has any revenue.
