ORIC Pharmaceuticals (ORIC): Assessing Valuation as New Enozertinib Clinical Data Sparks Investor Interest

ORIC Pharmaceuticals (ORIC) drew fresh investor attention after announcing it will present Phase 1b clinical data for enozertinib in previously treated HER2 exon 20 mutant NSCLC at the ESMO Asia Congress this week.

See our latest analysis for ORIC Pharmaceuticals.

Excitement around ORIC Pharmaceuticals’ upcoming clinical data release has arrived following a period of strong price momentum. Shares have climbed 35% so far in 2024, with a notable 7% gain over the past three months, helping to offset recent pullbacks. Even with some short-term volatility, the stock has delivered a 9.6% total shareholder return over the past year and a 177% total return for investors who have held over three years. This suggests that confidence is building around the company’s development pipeline and future prospects.

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Given this backdrop of strong returns and clinical momentum, is ORIC Pharmaceuticals still trading below its true potential? Alternatively, are investors already factoring in every bit of future growth that recent headlines promise?

Price-to-Book of 2.7x: Is it justified?

With ORIC Pharmaceuticals trading at a price-to-book (P/B) ratio of 2.7x, the stock is closely aligned with the US Biotech industry average of 2.8x. This suggests that, at the last close of $11.15, the market is valuing the company similarly to its sector peers despite notable volatility and momentum shifts.

The price-to-book ratio compares a company’s market value to its book value and is a key measure for biotechs, which often have minimal revenue but significant development assets. For clinical-stage companies like ORIC, it can be a useful way to gauge how much investors are paying for assets and potential future therapies, especially before profitability is achieved.

Given that ORIC’s P/B multiple is essentially in line with the industry average, the market appears to be neither strongly discounting nor assigning a premium for the company’s unique clinical-stage pipeline or business risks. Investors are effectively saying the company’s assets and pipeline potential are worth approximately what other biotechs command at this development phase.

Compared to peers, ORIC’s price-to-book value positions it right in the middle of the biotech pack. There is little evidence of a market disconnect or a strong re-rating, even as the stock gains attention for clinical events.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book of 2.7x (ABOUT RIGHT)

However, persistent net losses and dependence on clinical milestones could weigh on sentiment if key studies underdeliver or if market enthusiasm fades.

Find out about the key risks to this ORIC Pharmaceuticals narrative.

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A great starting point for your ORIC Pharmaceuticals research is our analysis highlighting 4 important warning signs that could impact your investment decision.

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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.

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