Wells Fargo analyst James Shin and the team assumed coverage on cancer-focused biotech Zymeworks Inc. (NYSE:ZYME) with an Overweight recommendation Tuesday, noting a range of catalysts the Canadian company expects to generate over the next several months.
However, the firm lowers the ZYME target to $9 from $45 per share, noting a change in valuation to a DCF-based method with a higher discount rate that reflects the early-stage clinical development and uncertainty in the pipeline.
As potential catalysts, Wells Fargo cites pivotal topline data expected for bispecific antibody Zanidatamab as a second-line option for biliary tract cancer in Q4 2022 and as a first-line combination therapy in HER2-positive gastroesophageal adenocarcinomas in 1H 2022.
While the former is a small/ rare indication, the analysts project a $450M opportunity for the latter, where, according to them, the candidate has outperformed the combination of BeiGene’s (BGNE) anti–PD-1 antibody Trastuzumab and chemotherapy.
The team also expects mid-stage data for a drug combination comprising Zanidatamab as a third-line option for breast cancer in Q4 2022. Yet, they see a challenging setup due to Enhertu, a rival breast cancer therapy developed by AstraZeneca (AZN) and Daiichi Sankyo (OTCPK:DSKYF) (OTCPK:DSNKY).
In May, AstraZeneca (AZN) and Daiichi (OTCPK:DSKYF) announced the U.S. regulatory clearance for Enhertu in HER2-positive breast cancer.