On Tuesday, Stifel adjusted its financial outlook for Zentalis Pharmaceuticals (NASDAQ:ZNTL), reducing the price target to $32 from the previous $36 while maintaining a Buy rating on the stock. This adjustment comes as Zentalis continues to progress with its key clinical trials.
Zentalis' first quarter of 2024 (1Q24) update, which did not include a conference call, reaffirmed the company's timeline for delivering top-line results from the pivotal PROC study of azenosertib monotherapy, known as DENALI, expected in the first half of 2025 (1H25). The significance of DENALI's probability of success (PoS) will be influenced by phase 1 data updates anticipated in the second half of 2024 (2H24). These updates are projected to expand the patient sample size for the 400mg 5:2 optimized dose, currently at 13 participants.
The anticipated data will include additional PROC patients from the phase 1b monotherapy study, last reported in June 2023, and a new monotherapy cohort from the MAMMOTH study targeting PARPi-resistant PROC. The MAMMOTH study is particularly noteworthy as it requires fresh tissue samples, enabling biomarker analysis of Cyclin E1 status. This analysis is crucial for categorizing patient cohorts within the DENALI study.
The firm highlighted the potential for Zentalis' azenosertib to achieve a greater than 30% objective response rate (ORR) and a median progression-free survival (mPFS) of over six months in the Cyclin E1 positive population in the DENALI trial. Stifel drew a comparison with AbbVie (NYSE:ABBV)'s Elahere, which has been approved for FRα+ PROC and is generating approximately $450 million annually, despite targeting a biomarker population half the size of the Cyclin E1 positive group.
Despite this, the current enterprise value (EV) of Zentalis, at around $350 million, seems to undervalue the accelerated approval prospects for azenosertib in the DENALI study.
InvestingPro Insights
As Zentalis Pharmaceuticals (NASDAQ:ZNTL) advances through its clinical trials, it's important to consider various financial metrics and expert insights that may influence the company's stock performance. According to the latest data from InvestingPro, Zentalis holds a market cap of approximately $874.17 million and has experienced significant stock price volatility, with a one-month price total return showing a sharp decline of -22.28%. This could be reflective of the market's reaction to the ongoing developments and the risks associated with clinical trials.
InvestingPro Tips suggest that Zentalis is quickly burning through cash and suffers from weak gross profit margins, which are crucial considerations for investors. Additionally, the company's stock has fared poorly over the last month, and analysts do not anticipate profitability this year. On the positive side, Zentalis holds more cash than debt on its balance sheet and has liquid assets that exceed short-term obligations, providing some financial stability amidst the uncertainty of clinical trial outcomes.
For investors looking to delve deeper into Zentalis' financial health and stock performance, there are additional InvestingPro Tips available that could offer further insights into the company's future prospects. To explore these tips and gain a more comprehensive understanding, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/ZNTL.
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