Zymeworks has lots of upside, Paradigm Capital says

Paradigm Capital analyst Rahul Sarugaser is expecting 2019 to be a big clinical year for Zymeworks (Zymeworks Stock Quote, Chart NYSE:ZYME) In response to the company’s just-released financial numbers, the analyst is maintaining his “Buy” rating and (US) $30.00 target price.

Clinical-stage biopharma company Zymeworks reported its 2018 year-end results on Wednesday, coming in with revenue for the year of $53.0 million compared to $51.8 million in 2017 with an Adjusted EBITDA loss of $33.0 million. (All figures in US dollars unless noted otherwise.)

“Over the past year, we have made significant progress advancing our own pipeline while our partners continued developing their assets using our technology,” said Ali Tehrani, Ph.D., Zymeworks’ President & CEO, in a press release. “Our lead program, ZW25, continued to generate impressive clinical data and our second product candidate, ZW49, recently began a Phase 1 clinical trial. We also established our seventh and eighth pharmaceutical partnerships while our long-term partner, Eli Lilly, advanced two of their Azymetric bispecifics into the clinic.”

Sarugaser says that the $53.0 million top line was below the consensus of $63.4 million but in line with his $54.0 million estimate. The Adjusted EBITDA loss of $33.0 million was also below the Street’s loss of $7.6 million but in line with Sarugaser’s negative $32.0 million estimate.

The analyst is anticipating clinical results in 2019 on both ZW25 and ZW49.

“2018 results were in-line with our expectations, and with $200 million of available cash, ZYME has the resources to pursue its clinical ambitions advancing ZW25 and ZW49,” Sarugaser said in a client update Thursday.

“We anticipate some data from ZW49 at ASCO in May, and look forward to additional data from the multiple ZW25 trials in the second half of 2019 through 2020. With ZYME’s deep pipeline of bispecific partnerships and assets, we see ZYME as an excellent investment opportunity for both the short and the long term,” he said.

Sarugaser’s (US) $30.00 target price represented a projected return of 110.4 per cent at the time of publication.