Septerna (SEPN) has begun dosing the first participants in its Phase 1 trial of SEP-479, an oral PTH1R agonist for hypoparathyroidism, marking a key milestone that now puts early safety data in focus.

The Phase 1 dosing update comes as Septerna’s share price sits at $24.13, with a 1-day share price return of 3.38% contrasting with a 90-day share price return of a 9.73% decline and a 1-year total shareholder return of 283.62%. This suggests earlier momentum has cooled recently, even after a strong run for longer term holders.

If this kind of early stage biotech catalyst interests you, it can be worth broadening your watchlist to see which other healthcare names are moving through similar milestones via our 34 healthcare AI stocks

With Septerna now in the clinic and the stock at $24.13, the key question is whether a very large roughly 1 year return still leaves room for upside, or if the market is already pricing in future growth.

Price-to-Sales of 23.6x: Is it justified?

Septerna trades on a P/S of 23.6x at a last close of $24.13, which is well above both the US pharmaceuticals average and its closest peer group.

The P/S ratio compares a company’s market value to its revenue and is often used for early stage or unprofitable biotech names where earnings are not yet positive. For Septerna, this means investors are currently paying $23.60 in market value for every $1 of revenue. The company reported a net loss of $48.879 million on revenue of $45.951 million and is forecast to remain unprofitable over the next 3 years.

Compared with the US pharmaceuticals industry average P/S of 4.6x and a peer average of 12.2x, Septerna’s 23.6x sits at a much higher level. It is also well above an estimated fair P/S of 4.3x, which is a level the market could potentially move towards if sentiment or expectations change.

Result: Price-to-Sales of 23.6x (OVERVALUED)

However, there are clear risks here, including early stage trial uncertainty and a revenue base of US$45.951 million compared with a net loss of US$48.879 million.

Next Steps

Given the mixed signals around valuation, risk and reward, it makes sense to review the underlying data yourself and decide quickly where you stand by consulting the 1 key reward and 2 important warning signs.

Looking for more investment ideas?

If Septerna is on your radar, do not stop there. Broaden your opportunity set with other focused stock lists that match different goals and risk levels.

• Target potential mispricing by checking companies that screen as 57 high quality undervalued stocks.
• Build a steadier income stream by reviewing stocks highlighted as 12 dividend fortresses.
• Prioritise capital preservation by focusing on businesses identified through our 74 resilient stocks with low risk scores.

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.