Why Wave Life Sciences Stock Vaulted 146% Higher on Monday
Key Points
The biotech's investigational weight loss drug did very well in a clinical trial.
This is a white-hot segment of the pharmaceutical market, so it's little wonder investors subsequently pounced on the stock.
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Even in the volatile biotech sector, it's rare for a company's stock price to more than double in a single trading session. This is what made Monday so memorable for Wave Life Sciences (NASDAQ: WVE), which trumpeted a significant advancement in a white-hot segment of the pharmaceutical industry and was rewarded by Mr. Market with a 146% increase in its share price.
Weight loss leads to stock market gain
Before market open, Wave presented interim data from a phase 1 clinical trial of its WVE-007 weight loss drug. The treatment was found to reduce total body fat in its recipients by 4.5% over the three-month trial period. By comparison, there were no statistically meaningful changes in patients administered a placebo.
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Image source: Getty Images.
The body fat reduction figures tops semaglutide at the same point in its development (this is the active ingredient in the popular Wegovy obesity drug developed by Novo Nordisk).
Wave added that the treatment was generally safe and well-tolerated. It was eager to compare its results to those of the GLP-1 drugs, like Wegovy, that are currently Food and Drug Administration (FDA)-approved for weight loss.
It quoted CEO Paul Bolno as saying that "After only three months at our lowest therapeutic single dose of WVE-007, we are observing fat loss that exceeded our expectations and is on par with GLP-1s without their associated impact on muscle loss, and a compelling safety and tolerability profile."
A Wave of optimism
If any biotech can get investors overly excited for an investigational drug, it's one developing medications to target obesity. Wave clearly has a contender with WVE-007, although since it's relatively early in the development process, we should always bear in mind that its ultimate success in the lab -- and subsequent regulatory approval -- is not a sure thing.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
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