Olema Pharmaceuticals (NASDAQ:OLMA), a clinical-stage biopharmaceutical company, presented positive news about its lead pipeline candidate. As a result, OLMA stock climbed over 21% in the past month. Also, the company’s collaboration with giants like Novartis (NYSE:NVS) and Pfizer (NYSE:PFE) enhanced expectations, with trial updates anticipated by the end of 2024.
However, FDA approvals and consequent revenue generation could still be far off. This potentially extended timeline calls for a patient approach despite recent enthusiasm. Long-term investors interested in more speculative clinical-stage biopharma opportunities may find this an attractive option.
Olema Oncology’s Pipeline
Olema Oncology, a clinical-stage biopharmaceutical company, focuses on transforming the standard of care for women with cancer by developing targeted therapies. The company’s main product, palazestrant (OP-1250), a complete estrogen receptor (ER) antagonist and a selective ER degrader, is currently being tested in a Phase 2/3 clinical trial.
The drug, designed for oral administration, is intended for use in patients with recurrent, locally advanced, or metastatic ER-positive (ER+) human epidermal growth factor receptor 2-negative (HER2-) breast cancer. Notably, palazestrant has received FDA Fast Track designation for the treatment of ER+/HER2- metastatic breast cancer that has progressed after one or more lines of endocrine therapy with a CDK4/6 inhibitor.
Regarding the market’s potential, Cantor Fitzgerald has estimated that the global market for oncology drugs will grow from $180 billion in 2022 to $323 billion by 2028. This indicates a significant growth rate compared to other therapeutic areas, suggesting a vast market opportunity for Olema Oncology’s drugs, given their successful development and FDA approval.
Analysis of Olema’s Recent Financials
Olema recently published its quarterly earnings results. The company did not report any significant revenue for the first quarter of 2024. Net losses for the quarter rose to $31.0 million, an increase from the previous year’s $28.3 million for the same period. This increased loss is attributed to heightened spending on research and clinical development activities due to late-stage clinical trials for palazestrant and the advancement of the KAT6 inhibitor program.
However, the increase was partially offset by a decrease in general and administrative expenses and increased interest income from marketable securities. Earnings per share (EPS) of -$0.56 fell short of the anticipated consensus estimate of -$0.51.
That said, Olema’s financial status remained sturdy, with zero debt and cash, cash equivalents, and marketable securities totaling $249 million as of March 31, 2024. The company’s current cash burn level suggests a runway of several years, likely long enough to see the lead treatment candidate through clinical trials and FDA approval.
Is OLMA Stock a Buy?
Analysts following Olema Pharmaceuticals are bullish on the stock. For instance, Canaccord Genuity analyst William Maughan, a five-star analyst according to TipRanks ratings, recently reiterated a Buy rating on the stock with a price target of $24, noting the recent presentation of clinical trial data indicated significant potential.
Olema Pharmaceuticals is rated a Strong Buy based on ten unanimous Buys over the past three months. The average price target for OLMA stock is $26.33, representing an upside of 88.21% from current levels.
OLMA stock is highly volatile, though it has been on an upward trajectory overall, climbing 135% in the past year. It trades in the upper end of its 52-week price range of $5.64-$17.79 and demonstrates ongoing positive price momentum, trading above its 20-day (9.89) and 50-day (10.47) moving averages.
Conclusion on OLMA
Olema has seen a surge in share price following positive news regarding its lead pipeline candidate, palazestrant. Collaborations with industry leaders like Novartis and Pfizer, as well as promising trial results and strong financial grounding, make Olema an attractive option for long-term investors willing to ride the wave of clinical-stage biopharma patiently.
