Analyst Sees Major Growth for Biopharma With Weight-Loss Drug
Research Report

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Recent successes of weight-loss drugs like Ozempic and Wegovy have led H.C. Wainwright & Co. Analyst Ed Arce to be "intrigued" by MetaVia Inc.'s (MTVA:NASDAQ) dual GLP-a agonist drug known as DA-1726.

In a December 30 research note initiating coverage on the company, he rated the stock a Buy with a US$12 per share price target, a nearly 600% premium from the stock's price at the time of the report.

"In a preclinical study against tirzepatide (a dual agonist for GLP-1 and glucose-dependent insulinotropic peptide, or GIP), DA-1726 showed comparable weight loss, but also showed improvements in key metabolic measures including glucose, triglycerides, and cholesterol," Arce wrote. "DA-1726 was also comparable or superior to survodutide (a dual GCG/GLP-1 receptor agonist) in another preclinical animal study, with greater weight reductions than survodutide and comparable food consumption."

DA-1726's safety, tolerability, and PK in obese but otherwise healthy adults was confirmed in Part 1 of an ongoing Phase 1 study, the analyst noted. Part 2 results in 1Q25 — particularly a four-week weight loss exploratory endpoint — will be the next major milestone for MetaVia, he said.

Potential for Obesity 'Major Part' of Thesis

DA-1726 is a novel oxyntomodulin (OXM) analogue designed as a dual agonist targeting glucagon-like peptide-1 (GLP-1) and glucagon (GCG) receptors, the report said. Dosed as a weekly subcutaneous injection, DA-1726 is designed to simultaneously suppress appetite, promote insulin secretion, and boost energy expenditure by activating both GLP-1 and GCG receptors.

"After meals, pancreatic beta cells release insulin into the bloodstream, enabling cells to absorb glucose and reduce blood glucose levels," wrote Arce. "During extended fasting, pancreatic alpha cells secrete GCG, which triggers glucose production. While GCG enhances energy expenditure, GLP-1 slows gastric emptying, increases thermogenesis in brown adipose tissue, and lowers blood glucose."

The potential in treating obesity for MetaVia's DA-1726 "represents a major part of our thesis," the analyst said. "Obesity represents a multifaceted, chronic metabolic condition characterized by increases in adipose tissue mass, stemming from complex interactions among genetics, hormonal signaling, and other factors."

According to the report, the World Health Organization has estimated that obesity affected about 890 million adults globally in 2022, with the prevalence expected to increase in coming years.

"Lifestyle interventions such as diet and exercise typically result in moderate weight loss of approximately 5–7%, (but) these losses tend to diminish over time," Arce wrote. "Historically, pharmacological treatments have achieved modest reductions of up to 10%, and bariatric surgery has been viewed as the most effective strategy, offering average weight loss of 30–40%. However, its irreversible nature, surgery-related morbidity, and potential complications present significant drawback."

'Wild Card' Drug Candidate

Arce called another of MetaVia's drugs, DA-1241, the company's "wild card" to the metabolic dysfunction-associated steatohepatitis (MASH) market.

Metabolic dysfunction-associated steatotic liver disease (MASLD) encompasses a spectrum of fatty liver diseases from steatotic liver disease to MASH, he noted.

"In the U.S., the prevalence of MASH is projected to increase from approximately 16.5 million in 2015 to 27 million by 2030," he wrote. "DA-1241 is MetaVia's GPR119 agonist that primarily acts in the pancreas, intestine, and liver."

In preclinical studies, the drug "mediated GPR119 activation in hepatocytes, macrophages, and hepatic stellate cells (HSCs), and has been shown to prevent lipid accumulation, immune cell infiltration, and collagen fiber synthesis in the liver," Arce said.

Valuation Model

Arce said his firm has employed a risk-adjusted NPV valuation model to estimate the value of the company's shares. The US$12 price target is based on"US$8.93 per share for U.S. net sales and EU royalties on DA-1726 for obesity (assume commercial launch in 1H32; 30% PoS; US$2.1B global peak revenues in 2040); and . . .  US$3.09 per share for U.S. net sales and EU royalties on DA-1241 for MASH."

"In our valuation model, we employ a 15.5% discount rate, which we believe adequately reflects the overall risks facing MetaVia," Arce continued.

Those risks include any disappointing data from Part 2 of the Phase 1 study with DA-1726 in obesity, failure to determine a treatment combination for DA-1241 in MASH, a smaller than anticipated commercial opportunity due to market size, competition, and significant delays to development timelines, he said.