Wave Life Sciences offers an exciting new obesity treatment that can translate to big gains ahead, according to Wells Fargo. The bank reiterated the Singapore-based biotech name as overweight and hiked its price target to $29 per share from $16. This updated forecast implies an upside ahead of more than 57%. Wave Life Sciences has surged 50% this year, adding 147% alone on Monday after announcing positive interim data from a Phase 1 trial of an RNA obesity shot which helped cut fat without muscle loss. WVE YTD mountain WVE YTD chart In the note, Burnett called the stock's Monday surge "warranted as these data help de-risk a new [mechanism of action] in a potentially large market," he wrote. "Not only that, but we think there's a scenario where WVE-007 emerges with a competitive profile to GLP1: once yearly dosing, better GI tox, and muscle sparing," he added. "If ARWR data (early Jan) are also pos, we think this should improve conviction in the MoA. Even with some competition, we think fully de-risking '007 implies substantial upside." Meanwhile, the drug's tolerability profile already seems off to an encouraging start. It could potentially offer better gastrointestinal tolerability than a traditional GLP-1 medication, Burnett offered. "We think it might given the unique [mechanism of action], lack of a clear dose response on drug-related-TEAE, and mgmt.'s statement that 'there were no GI issues,'" he wrote. Due to the drug's potential for more gastrointestinal tolerances and greater muscle sparing — combined with a more convenient dosing schedule of once or twice yearly — Burnett sees a path ahead for it to emerge with a more competitive product profile versus a GLP-1. Wave Life Sciences shares rose more than 6% following Wells' bullish call.
