On Tuesday, Wolfe Research began coverage on Spyre (NASDAQ:SYRE), assigning the biopharmaceutical company an Outperform rating. The firm’s analyst, Andy Chen, provided a positive outlook based on Spyre’s business model and portfolio of treatments for ulcerative colitis (UC) and potentially Crohn’s disease (CD). With a market capitalization of $1.12 billion and current trading price of $18.54, the stock has experienced significant volatility, declining over 53% in the past year. According to InvestingPro data, analysts maintain a strong bullish consensus with price targets ranging up to $71.
Chen highlighted Spyre’s ownership of IL-23, α4β7, and IL-23 molecules as a key advantage, allowing the company to explore various coformulations in UC and potentially CD. He contrasted this with AbbVie (NYSE:ABBV)’s pipeline, which lacks a TL1A molecule, and noted that Johnson & Johnson is conducting Phase 2 trials of a coformulated Tremfya + Simponi in UC and CD.
The analyst pointed out that the future of UC treatment is likely to be dominated by combination therapies. Despite Spyre’s late entry to the market, the company’s first 12 months of Omvoh sales following its October 2023 approval in the US generated $67 million, compared to the $95 million estimated by Wolfe Research for Entyvio in its initial year post-approval in May 2014.
Chen also discussed the potential for high-efficacy combination treatments to become the standard first-line therapy after steroids and immunosuppressants, without patients needing to first cycle through biosimilars. He mentioned that insurance payers are lenient with step therapy in inflammatory bowel disease (IBD) due to its severity.
The analyst noted that upcoming Phase 1 topline data for SPY002 (TL1A) and SPY003 (IL-23) in UC and Phase 2 trial initiations are not expected to significantly impact Spyre’s stock. However, the most critical catalysts for the company will be the results from Johnson & Johnson’s trials, which will clarify the efficacy of combination treatments in CD and refractory UC, as well as the safety profile of these therapies.
In his analysis, Chen expressed a bullish stance on the DUET-UC trial, while remaining cautious about the DUET-CD trial due to concerns about Simponi’s effectiveness in CD. He concluded that exhaustive analyses suggest that combination therapies have a safety profile comparable to monotherapies and that the efficacy of TL1A combination treatments could surpass TNF + IL-23 therapies. Chen also speculated that if Phase 2 results for TL1A monotherapy decline in Phase 3, it could further distinguish combination treatments from monotherapies in terms of efficacy. With the next earnings report due on May 8, 2025, investors can gain deeper insights into Spyre’s financial trajectory through InvestingPro, which offers comprehensive analysis including 8 additional ProTips and detailed financial metrics to help evaluate the company’s potential.
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