Stifel has reiterated a Buy rating on shares of Zymeworks (NASDAQ: NASDAQ:ZYME), with a price target of $21.00.
The firm's analysis is based on recent data from a Phase 2 trial of zanidatamab combined with chemotherapy in first-line HER2-positive gastroesophageal adenocarcinoma (GEA).
The data, which was released alongside the European Society for Medical Oncology (ESMO) abstracts, supports the belief that this treatment could significantly outperform the current standard-of-care TOGA regimen.
The updated results from the trial showcased an objective response rate (ORR) of 84%, a median duration of response (mDOR) of 15 months, and a two-year landmark overall survival (OS) rate of 65%. These outcomes are considered to outpace all other clinical efficacy benchmarks from competitive Phase 2 and Phase 3 trials targeting HER2.
Key opinion leaders (KOLs) have suggested that if zanidatamab and chemotherapy demonstrate statistical improvements over the TOGA regimen, it could lead to a shift in treatment practices, regardless of PD-L1 expression status.
KOLs have indicated that they would confidently combine pembrolizumab with zanidatamab and chemotherapy in patients with PD-L1+ status.
Additionally, incremental data from the first-line metastatic colorectal cancer (mCRC) trial, although not altering the overall narrative, seems to reinforce the superiority of zanidatamab over other HER2-targeting treatments.
Zymeworks made significant changes in its executive leadership and revealed key developments in its Q2 2024 financial results.
Leone Patterson was officially appointed as Executive Vice President, Chief Business Officer, and Chief Financial Officer, replacing Kenneth Galbraith, who will continue to serve as Chair of the Board, CEO, and President.
The company also reported a cash position of $395.9 million and initiated a $60 million share repurchase program.
Zymeworks has received a priority review for its zanidatamab Biologics License Application for biliary tract cancers in the U.S., with ongoing reviews in Europe and China. However, they have discontinued the development of zanidatamab zovadotin to focus on early-stage programs. The company's partner, Jazz, has initiated a Phase 3 trial for zanidatamab in combination with chemotherapy.
InvestingPro Insights
As Zymeworks (NASDAQ:ZYME) continues to make waves in the medical community with its promising trial data, investors may find value in considering the company's financial health and market performance. According to InvestingPro, Zymeworks holds more cash than debt on its balance sheet, which could be an indicator of financial stability. Additionally, four analysts have recently revised their earnings expectations upwards for the upcoming period, reflecting a growing optimism around the company's financial prospects.
On the market performance front, Zymeworks has shown a strong return over the last year with a 64.33% price total return. This positive trend is also echoed in the short term, with a 15.61% return over the last month and an even more impressive 30.43% over the last three months. These figures suggest that investors have been responding favorably to the company's recent developments.
However, it's important to note that Zymeworks is not currently profitable, and analysts do not expect it to be profitable this year. The company's gross profit margins have been weak, with the last twelve months as of Q2 2024 showing a gross profit margin of -93.37%. This could be a concern for investors looking for immediate profitability, but the strong market returns and positive revisions in earnings forecasts may balance these concerns for those with a longer-term investment horizon.
For those interested in deeper analysis and additional insights, there are more InvestingPro Tips available at https://www.investing.com/pro/ZYME.
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