Biotech firms like Amgen Inc. (AMGN) and Regeneron Pharmaceuticals, Inc. (REGN) are pushing the boundaries of medicine - battling chronic diseases and reshaping patient care. Upstream Bio, Inc. (UPB), a rising star in this niche, is making waves by focusing on severe respiratory and inflammatory disorders. Founded in 2021, the clinical-stage biotech firm has drawn major attention since its stock started trading on the Nasdaq on Oct. 11, signaling its drive to revolutionize treatments for unmet medical needs.

Now, the company is poised for another milestone, with UPB joining the Russell 2000 Index (RUT) at the market open on Monday, Dec. 23, potentially boosting its visibility and liquidity. Inclusion in this widely followed small-cap benchmark could attract fresh capital and continue to drive the stock’s momentum.

This news comes as analysts at Jefferies and Fundstrat are bullish on small-cap stocks, with Jefferies calling for the Russell 2000 to rise 16% by 2025. Thanks to relatively cheaper valuations and projected earnings growth of roughly 41% in 2025, the firm says small caps are poised to outperform large caps.

While UPB stock has experienced some turbulence, its Russell 2000 debut could signal the beginning of a new chapter. With attention shifting to this biotech underdog, should investors seize the opportunity before the market catches on, or stay on the sidelines and wait for more clarity?

About Upstream Bio Stock

Upstream Bio, Inc. (UPB), based in Waltham, Massachusetts, is charting new frontiers in biotechnology. Focused on battling inflammatory diseases, the clinical-stage firm is developing verekitug, a monoclonal antibody targeting the thymic stromal lymphopoietin receptor.

With a keen eye on severe respiratory disorders, including asthma, chronic rhinosinusitis, and COPD, Upstream Bio aims to redefine care for those who need it most, blending innovation with hope for transformative therapies. Its market cap currently stands at $1.05 billion.

After pricing its IPO at $17, UPB soared to a high of $29.48 earlier this month, but has since cooled off by 35%. The stock now trades at a slight discount to its IPO price, highlighting the volatility inherent in clinical-stage biotech stocks.

Upstream Bio Rises After Q3 Revenue Beat

On Nov. 7, Upstream Bio released its fiscal Q3 earnings, and the market took notice, pushing UPB stock up nearly 1.7%. While the biotech firm is not profitable yet, posting a loss of $6.96 per share, collaboration revenue of $607 million exceeded analysts’ forecasts.

Upstream’s cash position jumped to $220.7 million as of Sept. 30, a significant leap from $109.8 million as of Dec. 31, 2023. Combined with the net proceeds from its IPO in October, the company believes it is well-capitalized to fund operations through 2027.

R&D expenses for Q3 hit $15.4 million, more than double last year's $7.8 million, driven by increased clinical and manufacturing costs tied to its promising verekitug program.

In Q3 2024, Upstream Bio presented promising data from its Phase 1b trial of verekitug at the European Respiratory Society Conference. The treatment showed high potency, surpassing tezepelumab in reducing FeNO by 50%. The drug maintained TSLP receptor occupancy and demonstrated substantial reductions in FeNO and blood eosinophils. Upstream also progressed with planning for Phase 2 trials in COPD and continued testing extended dosing regimens in asthma and CRSwNP.

Looking ahead, Upstream Bio is primed to capitalize on its strong financial footing and cutting-edge pipeline, setting its sights on tackling the significant gaps in treating severe inflammatory diseases. With promising trials underway, the company is poised to deliver breakthrough results that could reshape the landscape of treatment for these challenging conditions.

What Do Analysts Expect for Upstream Bio Stock?

Upstream Bio is garnering bullish attention on Wall Street. In November, JPMorgan initiated coverage with an "Overweight" rating and a $38 price target, spotlighting verekitug as a promising monoclonal antibody targeting thymic stromal lymphopoietin (TSLP) receptors for severe asthma, chronic rhinosinusitis, and COPD. Analysts see this innovative therapy as the stock’s key growth engine.

Piper Sandler echoed this bullish sentiment with an even loftier $75 target - also the Street-high, implying an upside of 365% - citing verekitug's unique TSLP receptor targeting. With Tezspire's 2021 approval validating this pathway in severe asthma, the brokerage firm sees a de-risked $7.5 billion biologic market ripe for growth, positioning Upstream for a significant opportunity.

While coverage is light, UPB has a unanimous “Strong Buy” rating from all four analysts covering the stock, and the mean price target of $56.50 implies 250.7% upside potential. 

Upstream Bio stock certainly looks like a strong biotech contender poised for a breakout - but with the company’s prospects still tied to a single drug in development, investors should be aware of the heightened risk involved with investing in this unprofitable small-cap, and consider starting with a smaller-than-usual stake before diving in.