Buy Rating on Zentalis Pharmaceuticals Amid High Expectations for Azeno Drug Trials

Derek Archila, an analyst from Wells Fargo, maintained the Buy rating on Zentalis Pharmaceuticals (ZNTL – Research Report). The associated price target remains the same with $29.00.

Derek Archila has given his Buy rating due to a combination of factors surrounding Zentalis Pharmaceuticals, focusing on the potential of their drug azeno. Archila sees azeno as a differentiated treatment, particularly in comparison to AZN’s adavosertib, and anticipates significant updates in the second half of the year that could positively impact the stock’s value. The upcoming data from the azeno+gem trial in osteosarcoma, though derived from a small patient population, is expected to reveal important information regarding the drug’s safety, optimal dosage, and efficacy in p53 mutant tumors. High expectations are set for the combination therapy to substantially outperform the current single-agent chemotherapy benchmarks.

Furthermore, the final results from the Phase 1 monotherapy trial of azeno could serve as a pivotal moment for the company in 2024, potentially addressing concerns from prior datasets and establishing the drug’s biomarker selection potential. Archila anticipates that strong outcomes in terms of overall response rate and duration of response would significantly mitigate investment risks. Despite less emphasis on the MAMMOTH trial’s PARP combo due to dosage limitations, there is still keen interest in azeno’s monotherapy arm. With a solid cash position projected to last into mid-2026, Archila argues that the current stock price undervalues azeno’s potential and that the risk/reward is highly favorable, potentially leading to a doubling of the stock value by year-end based on these updates.

In another report released yesterday, Stifel Nicolaus also maintained a Buy rating on the stock with a $32.00 price target.

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Zentalis Pharmaceuticals (ZNTL) Company Description:

Zentalis Pharmaceuticals LLC is a clinical-stage biopharmaceutical company focused on discovering and developing small molecule therapeutics targeting fundamental biological pathways of cancers. It uses drug discovery engine, which it refers to as Integrated Discovery Engine, to identify targets and develop small molecule new chemical entities, or NCEs, with properties that it believes could result in potentially differentiated product profiles. The company’s product candidate, ZN-c5, is an oral selective estrogen receptor degrader, or SERD, currently in a Phase 1/2 clinical trial for the treatment of estrogen receptor positive, human epidermal growth factor receptor 2-negative, or ER+/HER2-, advanced or metastatic breast cancer. Its other products include ZN-c3, ZN-d5, and ZN-e4.