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Investing.com - Canaccord Genuity has reiterated its Buy rating and $12.00 price target on Fractyl Health Inc (NASDAQ:GUTS), currently trading at $1.79, following the company’s presentation of updated data from its Phase 3 trial of Revita. The stock has shown strong momentum, gaining nearly 18% over the past week. According to InvestingPro analysis, the company appears undervalued based on its Fair Value estimates.
The investment firm conducted follow-up discussions with several physicians after Fractyl presented data from the open-label cohort of its ongoing Phase 3 trial for Revita in weight maintenance at the American Diabetes Association meeting.
The physicians consulted by Canaccord Genuity, all from large U.S. academic hospitals, expressed varying views on the mechanism behind the Revita procedure and the potential market size, though all agreed that controlled data is necessary to fully assess the clinical profile.
Durability of effect was identified as the key question by the physicians, with Canaccord noting that even conservative market share estimates from these doctors exceeded the firm’s current modeling assumptions.
Canaccord Genuity currently assumes 1% peak penetration in the weight maintenance population for Revita, with 60% probability of success and peak sales of $400 million in 2031, representing $6 per share in their valuation model.
In other recent news, Fractyl Health reported its Q1 2025 earnings, highlighting a significant rise in research and development expenses, which increased to $19.4 million from $14.4 million in Q1 2024. The company also experienced a widened net loss of $23.7 million, compared to $3.3 million in the previous year. Despite these financial challenges, Fractyl Health maintains a strong cash position with $42.1 million on hand, ensuring operational stability into late 2025. Additionally, the company shared positive three-month data from its REVEAL-1 study, where most participants maintained or lost weight after discontinuing GLP-1 therapy and undergoing the Revita procedure. Evercore ISI reiterated its outperform rating for Fractyl Health, citing promising results from the study. Fractyl Health also announced the issuance of two new U.S. patents for its duodenal resurfacing technology, strengthening its intellectual property portfolio. Moreover, the company advanced its gene therapy program, submitting the first module of its Clinical Trial Application in Europe for RJVA-001, aimed at treating type 2 diabetes and obesity.
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