The ResMed Inc (ASX: RMD) share price was under pressure on Tuesday and dropped into the red.
Investors were selling the sleep disorder treatment company's shares in response to the release of trial results from a potential future competitor in the obstructive sleep apnoea (OSA) treatment space.
Those results revealed that US-based biotech company Apnimed's lead candidate, AD109, met its primary endpoint in its Phase 3 SynAIRgy clinical trial.
AD109 is a once-daily oral pill designed to treat OSA by targeting the neuromuscular root cause of the condition.
Should you buy the dip in the ResMed share price?
This morning, Goldman Sachs has responded to the news. It stated:
Apnimed announced top line Phase 3 clinical trial results for AD109, an investigational once-daily oral pill for Obstructive Sleep Apnea (OSA). According to Apnimed, AD109 met the primary endpoint, with study participants treated with the drug achieving a mean reduction in AHI (apnea-hypopnea index) of 55.6% from baseline. The company expects topline results in Q3 2025 from its second Phase 3 clinical trial and plans to submit a New Drug Application (NDA) to the US FDA for AD109 by early 2026.
However, the broker has described the selling of ResMed's shares as an "over-reaction". It said:
In our view, RMD's share price weakness (-4.4% close of 20 May 2025, ASX200 +0.6%) in response to this update is an over-reaction considering AD109's mechanism of action is unlikely to displace CPAP as first line therapy in treating OSA and Apnimed's initial target opportunity are patients who have refused or have failed CPAP. Importantly, we believe RMD's 2030 strategy positions the company closer to its end patients, introduces new revenue streams leveraging its IP in CPAP and expands its ex US presence which supports our ~9.2% group revenue CAGR forecasts (FY24-FY30).
In light of the above, Goldman thinks that investors should be buying the dip in the ResMed share price.
Big return potential
Its analysts have responded to the development by reaffirming their conviction buy rating and $49.30 price target on the company's shares.
Based on the current ResMed share price of $37.16, this implies potential upside of almost 33% for investors over the next 12 months. The broker concludes:
Our Buy recommendation on RMD is premised on (1) Ongoing robust new patient growth for CPAP therapy despite the market entry of GLP-1 drugs to treat OSA, (2) Further RMD market share gains, building on its #1 global market position, (3) Expansion of the OSA market in regions outside of the US. We believe the stock's current trading multiple is unjustified based on its growth outlook.
