Stock Analysis & Valuation Tempest Therapeutics, Inc. (TPST)

• Previous Close: $2.71
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Tempest Therapeutics, Inc. (NASDAQ: TPST) is a clinical-stage biotechnology company focused on developing innovative small molecule therapeutics for cancer treatment. Headquartered in South San Francisco, California, Tempest is advancing two key clinical programs: TPST-1495, a dual EP2/EP4 receptor antagonist in Phase 1 trials for solid tumors, and TPST-1120, a PPARα antagonist also in Phase 1 trials for solid tumors. The company’s research also targets TREX-1, an enzyme involved in tumor immune response modulation. Operating in the competitive oncology biotech sector, Tempest aims to address unmet needs in cancer therapy through novel mechanisms of action. With no current revenue and a market cap of approximately $23 million, the company remains in a high-risk, high-reward development phase typical of early-stage biotech firms.

Investment Summary

Tempest Therapeutics presents a high-risk, high-reward investment opportunity typical of clinical-stage biotech companies. The company’s pipeline, including TPST-1495 and TPST-1120, targets significant oncology markets, but both programs are in early-stage trials with no guaranteed success. With no revenue, negative net income (-$41.8M in latest reporting), and a cash runway that may require additional financing, Tempest is speculative. However, positive clinical data could drive substantial upside. Investors should weigh the potential of its novel mechanisms against the inherent risks of drug development failures, dilution risk, and dependence on trial outcomes. The negative beta (-1.765) suggests atypical market correlation, possibly increasing volatility.

Competitive Analysis

Tempest Therapeutics operates in the highly competitive oncology biotech space, where differentiation hinges on novel mechanisms and clinical efficacy. The company’s focus on small molecule therapeutics distinguishes it from biologic-focused competitors, potentially offering cost and manufacturing advantages. TPST-1495’s dual EP2/EP4 antagonism is a unique approach in targeting prostaglandin pathways, while TPST-1120’s PPARα inhibition is less common in oncology, providing a niche opportunity. However, Tempest faces intense competition from larger biopharma firms with deeper pipelines and resources. Its early-stage programs lack the validation of late-phase candidates, and the absence of partnerships increases financial risk. The company’s modest cash position ($30.3M) limits its ability to independently advance multiple programs, necessitating potential dilutive financing or partnerships. Success will depend on demonstrating superior efficacy or safety versus established immunotherapies and targeted therapies in crowded solid tumor indications.

Major Competitors

• Bristol-Myers Squibb (BMY): BMY is a leader in oncology with blockbuster drugs like Opdivo (PD-1 inhibitor) and Yervoy. Its vast resources and commercial infrastructure dwarf Tempest’s capabilities. However, BMY’s focus on biologics contrasts with Tempest’s small molecule approach, which may offer differentiation in manufacturing and cost.
• Merck & Co. (MRK): Merck’s Keytruda dominates the PD-1/L1 space, setting a high bar for efficacy in solid tumors. Merck’s financial strength and global reach far exceed Tempest’s, but Tempest’s novel targets (EP2/EP4, PPARα) could complement existing immunotherapies if clinical data supports combination potential.
• Incyte Corporation (INCY): Incyte’s small molecule focus (e.g., Jakafi) aligns closer with Tempest’s strategy. Incyte’s commercial experience and broader pipeline pose competition, but Tempest’s unique mechanisms may carve out a niche in specific tumor types where Incyte is less active.
• Roche Holding AG (RHHBY): Roche’s oncology portfolio (e.g., Tecentriq, Avastin) and diagnostic capabilities create a high barrier for Tempest. However, Roche’s emphasis on biologics and companion diagnostics leaves room for Tempest’s small molecules in less biomarker-driven settings.