Shares in biotech firm Wave Life Sciences (WVE) skyrocketed as high as 135% to over $17 on Monday. This came after initial results from the company’s ongoing first-in-human trial indicated that its experimental obesity drug can help spur weight loss.
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Wave Life Sciences, which focuses on using genetic medicine to treat severe brain and muscle diseases, tested the lowest dose of the drug WVE-007 (240 mg) among healthy overweight and obese volunteers. It found that the treatment reduced total and visceral fat after three months and led to an increase in lean body mass.
What’s WVE-007?
WVE-007, as an experimental drug, works by turning down the INHBE gene in the liver to help reduce unhealthy fat in people with obesity. The medication was designed using Wave Life Sciences’ SpinNA, a proprietary drug development platform.
Life Wave Science noted that the medication lowered Activin E levels in the blood for an extended period, meaning that patients might only need an injection once or twice a year. Activin E is a hormone‑like protein made mainly in the liver that influences how the body stores fat and manages sugar.
The biotech company noted that the interim results support an expanding list of data that support the role the INHBE gene could play in treating obesity.
Analysts Cheer Initial Results
Reacting to the initial data, Wall Street analysts have praised the results and showered price target boosts on WVE stock. Leerkin analyst Joseph Schwartz described the results as “an exciting first look” at the impact of the drug, adding that the data build on the “impressive activin E reductions.”
Schwartz added that the early data are “increasing excitement” for longer-term data at higher doses.
Jefferies analyst Roger Song noted that the result was in line with what the company had assumed to be the most likely outcome in their model. Song similarly noted that the results have given the firm “incremental confidence” of a bigger impact from higher doses. Song’s price target of $26 represents over 247% upside from the stock’s closing price of $7.47 per share on Friday, December 5.
Will Life Wave Sciences Drug Disrupt the Obesity Market?
This comes at a time when competition in the obesity market is heating up, particularly between Eli Lilly (LLY) and Novo Nordisk (NVO). Pfizer (PFE) recently acquired Metsera (MTSR) for $10 billion to bolster its position in the obesity market, which is currently valued at about $70 billion.
Industry observers consider Metsera as a highly promising obesity startup. Truist analyst Joon Lee added that the data marks a major, positive shift in the obesity treatment landscape in a highly disruptive way.
Is WVE a Good Stock to Buy?
Across Wall Street, Wave Life Sciences’ shares have a Strong Buy consensus rating from analysts. This is based on eight Buys and one Hold issued over the past three months.
At $18.25, the average WVE price target indicates over 7% growth potential.
