WEBULL
WebtradeDownload

Ascletis Pharma (SEHK:1672) Starts U.S. Obesity Trial As Valuation Looks About Right

Simply Wall St · 2d ago

Ascletis Pharma (SEHK:1672) has kicked off a U.S. Phase I trial for ASC36 oral tablets for obesity treatment, following recent FDA Investigational New Drug clearance that advances the obesity pipeline into human testing.

Ascletis Pharma’s latest obesity trial news hit as the HK$8.97 share price jumped with a 1-day share price return of 10.13%. However, the 30-day share price return is down 10.48% and the year-to-date share price return is down 22.14%, while the 3-year total shareholder return of about 3.9x points to much stronger longer-term momentum.

Scan beyond Ascletis Pharma and spot other drug developers pursuing high-impact pipelines through our hand picked 614 high quality undiscovered gems in the healthcare and biotech space.

After a 10% jump in Ascletis Pharma on the ASC36 trial news, the chart still shows a steep year-to-date decline and a very large gap to analyst targets. Is most of the rerating already priced in, or is this just the opening move?

Preferred Price-to-Book Multiple of 3.6x: Is It Justified for Ascletis Pharma?

On valuation, Ascletis Pharma trades on a P/B ratio of 3.6x, which lines up closely with the Hong Kong biotech peer average of 3.6x and sits below the broader peer group average of 6.3x, given the last close at HK$8.97.

The P/B multiple compares the market value of the equity to the book value on the balance sheet, which can be a useful cross check for a research led biotech that is still loss making. Since Ascletis Pharma is currently unprofitable, with a reported loss of CN¥591.6m and a negative return on equity of 26.05%, investors often lean on this kind of balance sheet based yardstick instead of earnings based ratios.

That combination, a P/B in line with the industry but lower than the broader peer group, suggests the market is not paying a premium for Ascletis Pharma despite forecasts that revenue could grow at 142.3% per year, which is far faster than the Hong Kong market at 9.1% per year. The share price also reflects meaningful risks, including the expectation that the business remains unprofitable over the next 3 years and that 100% of liabilities come from higher risk funding rather than customer deposits.

Compared with the Hong Kong Biotechs industry, the stock trades on a P/B multiple that is effectively identical to sector norms, which points to a market view that Ascletis Pharma belongs in the pack rather than on a clear premium or discount despite its broad pipeline and rapid revenue forecasts.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-book of 3.6x (ABOUT RIGHT)

Still, the reliance on high risk funding and the expectation of ongoing losses could quickly challenge the current Ascletis Pharma rerating story.

Find out about the key risks to this Ascletis Pharma narrative.

Next Steps

If the Ascletis Pharma story feels finely balanced between excitement and concern, step into the data yourself and pressure test both sides. To see how the mix of upside potential and flagged issues compares in one place, review the 1 key reward and 2 important warning signs.

Ready for more investment ideas beyond Ascletis Pharma?

Ascletis Pharma may be the headline today, but your portfolio can benefit if you keep hunting for fresh, high conviction ideas using targeted screeners.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.