A Look At Edgewise Therapeutics (EWTX) Valuation After Positive CIRRUS HCM Phase 2 Trial Update

Edgewise Therapeutics (EWTX) recently reported positive updates from its Phase 2 CIRRUS HCM trial for EDG-7500, a cardiac sarcomere modulator targeting hypertrophic cardiomyopathy, drawing fresh attention to the company’s broader pipeline and stock.

See our latest analysis for Edgewise Therapeutics.

The CIRRUS HCM update has arrived after a strong 90 day share price return of 53.55%, although the 1 year total shareholder return of a 7.20% decline and very large 3 year total shareholder return highlight a more mixed journey. This suggests that momentum has picked up recently as investors reassess the risk and potential of the pipeline alongside smaller items such as recent inducement stock option grants.

If this kind of biotech catalyst has your attention, it could be a good moment to scan other healthcare stocks that might fit your watchlist next.

With the shares up 53.55% over 90 days but still showing a 1-year total return decline and trading at a discount to the average analyst price target, is there still a buying opportunity here, or is the market already pricing in future growth?

Price to Book of 4.5x: Is it justified?

On a simple yardstick, Edgewise Therapeutics trades on a P/B of 4.5x, which sits well below a peer average of 35.2x but above the wider US pharmaceuticals average of 2.6x. This anchors the current US$23.57 share price in a mixed relative value picture.

The P/B multiple compares the company’s market value to its accounting equity. This can be a common reference point for early stage biopharma where revenue is minimal and earnings are negative. For a business with US$0 in revenue and a net loss of US$157.2m, P/B often becomes one of the few available gauges investors use to weigh up the market’s expectations against the balance sheet.

Against closer peers on this preferred metric, EWTX looks inexpensive, with its 4.5x P/B described as good value versus a 35.2x peer average. That suggests the market price is not assigning the same premium to the company’s muscle disorder pipeline that some other names in the peer group command, even though earnings are still negative and return on equity is currently weak.

However, when the lens is widened to the broader US pharmaceuticals industry, the same 4.5x P/B is described as expensive relative to the 2.6x industry average. This is a clear sign that the stock carries a richer tag than many sector names on this balance sheet measure. For anyone comparing ideas across the whole industry, that higher multiple stands out and raises the question of whether the pipeline and recent trial progress justify paying above the sector norm.

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

Result: Preferred multiple of 4.5x Price-to-Book (ABOUT RIGHT)

However, the story can change quickly if future trial readouts disappoint or if ongoing net losses of US$157.2m put more pressure on the balance sheet.

Find out about the key risks to this Edgewise Therapeutics narrative.

Build Your Own Edgewise Therapeutics Narrative

If you read the numbers differently or simply prefer to work from primary data, you can build and refine your own thesis in minutes, starting with Do it your way.

A great starting point for your Edgewise Therapeutics research is our analysis highlighting 3 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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