Alzheimer’s data presentation puts NewAmsterdam Pharma in focus

NewAmsterdam Pharma (NasdaqGM:NAMS) is drawing attention after announcing plans to present new obicetrapib data at the Alzheimer’s Association International Conference, highlighting the drug’s potential role in early Alzheimer’s disease prevention.

At a share price of $34.83, NewAmsterdam Pharma has seen a 7-day share price return of 4.78% and a 30-day share price return of 6.61%. Its 1-year total shareholder return of 75.47% points to momentum that has built over a longer period, helped by ongoing clinical updates around obicetrapib and recent equity awards to new hires.

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With NewAmsterdam Pharma trading at $34.83 and sitting at a sizeable discount to the average analyst price target, investors now have to ask: is this an underappreciated Alzheimer’s and cardiometabolic story, or is the market already pricing in the next leg of growth?

Price to book on NewAmsterdam Pharma: is the premium easy to justify?

With NewAmsterdam Pharma trading at $34.83, the stock is described as expensive on a price to book basis compared both to peers and the broader US Biotechs industry.

Price to book, or P/B, compares a company’s market value to its net assets on the balance sheet. For a late stage biotech that is still loss making, this ratio often reflects how much investors are willing to pay today for potential future cash flows from the pipeline rather than current profitability.

In this case, NewAmsterdam Pharma is flagged as having a P/B of 6.1x versus a peer average of 4.8x and 2.8x for the wider US Biotechs industry. That is a clear premium, suggesting the market is assigning more value to NewAmsterdam Pharma’s cardiometabolic and Alzheimer’s programs than to those of many listed biotech peers. The SWS DCF model points to a much higher future cash flow value of $162.56 compared to the current share price of $34.83.

Result: Price-to-book of 6.1x (OVERVALUED)

However, NewAmsterdam Pharma still carries clear risks, including ongoing losses of $212.733 million and execution risk around obicetrapib’s cardiometabolic and Alzheimer’s clinical programs.

Another view on NewAmsterdam Pharma’s value

The earlier P/B discussion presents NewAmsterdam Pharma as expensive relative to peers, but the SWS DCF model offers a different perspective. On that measure, the stock at $34.83 is trading well below an estimated future cash flow value of $162.56, implying a wide valuation gap that investors will want to interpret for themselves.

To understand how this model works in practice and what assumptions sit behind that headline number, Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NewAmsterdam Pharma for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 44 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mixed signals around NewAmsterdam Pharma have you undecided, take a moment to review the underlying data yourself, move quickly to shape your own view, then weigh that against the company’s 3 key rewards

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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.