Zymeworks has a 69 per cent upside, says Paradigm Capital

Clinical-stage biopharmaceutical company Zymeworks (Zymeworks Stock Quote, Chart TSX, NYSE:ZYME) has a new licensing agreement for its proprietary Zymelink antibody-drug conjugate (ADC) platform, an event which Paradigm Capital analyst Rahul Sarugaser says is further proof that Zymeworks’ platform is world-class. In a client update Tuesday, Sarugaser reiterated his “Buy” rating and US $30.00 target for ZYME.

Vancouver-based Zymeworks on Tuesday announced it had entered into a licensing agreement with San Francisco’s Iconic Therapeutics which gives the latter non-exclusive rights to the Zymelink platform for the development of its ICON-2 Tissue Factor ADC for cancer. The first collaboration for the Zymelink platform, President and CEO Ali Tehrani says that the deal gives further validation of Zymelink’s novel ADC technology.

“Historically, traditional ADC development has been plagued by a number of challenges related to toxicity and efficacy,” says Tehrani in a press release. “Our research has shown that ZymeLink has the capacity to significantly enhance exposure and tolerability, broadening the therapeutic window and leading to potentially safer and more efficacious therapeutic candidates.”

No numbers were reported with the announcement but Zymeworks says it is eligible to receive development and commercial milestone payments, tiered royalties on worldwide sales and co-promotion rights for any other products Iconic builds using the Zymelink platform.

Sarugaser calls the deal an important one for three reasons: first, the deal is now the ninth that Zymeworks has struck with pharma companies and thus adds to the company’s “already deep” pipeline; second, it validates the strength and depth of ZYME’s technology platforms; and third, as Zymelink is used in Zymeworks’ own proprietary drug candidate, ZW49, it provides validation for ZYME’s own drug candidates.

“This ZYME-Iconic licensing agreement provides another solid data point supporting the strength of ZYME’s world-class drug development platform, and provides the company yet another potential source of non-dilutive, milestone-based revenue,” says Sarugaser.

“We expect the deal, coupled with the mounting excitement associated with ZYME’s showing at ASCO in June, will engender strength in ZYME’s stock today,” he says. “With ZYME’s deep pipeline of nine Pharma partners and two proprietary clinical assets, we see the company as an excellent investment opportunity for both catalyst-driven investors and for investors seeking medium- to long-term returns.”

Sarugaser’s US$30.00 target represented a projected 12-month return of 69 per cent at the time of publication.