Health and Healthcare

How Speculative Biotech 9 Meters Biopharma Could Rise Tenfold

Chris Lange

Published: June 30, 2020 10:45 am

9 Meters Biopharma Inc. (NASDAQ: NMTR) may not be a household name right now, but one brokerage firm sees huge potential upside. In fact, SunTrust Robinson Humphrey sees 9 Meters stock rising tenfold.

The firm initiated coverage of 9 Meters with a Buy rating and a $5 price target, implying an upside of roughly 800% from the most recent closing price of $0.56. Srikripa Devarakonda and Robyn Karnauskas were the analysts on the SunTrust call.

Note that 9 Meters Biopharma is a mid-clinical-stage gastrointestinal (GI) company with programs in celiac disease (CeD) and short bowel syndrome (SBS). 9 Meters was formed as a merger of three companies and has existed in its current form only since April 2020.

SunTrust highlighted a couple key points of its thesis. The firm sees 9 Meters as having “Two shots on goal” with differentiated products in CeD and SBS. The company has experienced management with more than 50 years combined experience in GI and strategy to partner the programs. It also has strong shareholder base, including OrbiMed. It posted encouraging Phase 2b data in CeD with potential for a first-in-class drug targeting a $705 million peak.

The firm detailed in its report:

We see this as a high risk, under-covered opportunity with a favorable risk/reward profile with 850%-2500% upside/50% downside from CMP. We acknowledge investors are likely to see a pivotal trial in a tough-to-crack CeD, a pre-POC SBS program, and need to raise cash, as high risk. We highlight a strong risk-reward profile, with potential upside of $4 – $13/sh from positive data; stock likely to trade at cash of ~$0.2/sh if both programs fail. At 100% PoS, we see $19/sh; every $100 million in peak sales adds $3/sh to our DCF.

Overall, SunTrust sees incredible upside in 9 Meters, and its $5 price target could prove conservative if everything goes according to plan.

9 Meters Biopharma stock traded up about 16% at $0.65 on Tuesday, in a 52-week range of $0.40 to $0.94.