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These three Canadian pharma companies have analysts’ attention

Pharmaceutical companies aren’t every investor’s jam, what with their risk/reward meter at the upper end of the register. But fear not, here are three analysts’ picks from the Canadian pharma space that are worth a look. 

We start, in no particular order, with clinical-stage biopharma company Zymeworks (Zymeworks Stock Quote, Charts, Analysts, News, Financials NYSE:ZYME), which is a Vancouver-based company currently working on next-gen biotherapies for cancer treatment. Zymeworks has lead asset zanidatamab (ZW25) in Phase 2 trials for a number of cancers and antibody-drug conjugate ZW49 in Phase 1 safety and efficacy trials.

The stock has come off quite a bit from highs earlier this year, but Paradigm Capital analyst Scott McAuley thinks now is an exciting time for ZYME, with new zanidatamab data coming up soon. 

Zymeworks is scheduled to give a poster presentation at the European Society for Medical Oncology Congress on September 16, along with further trial results later in the year and into 2022, all of which should provide more of a spotlight on ZYME, according to McAuley.

“[The ESMO presentation] will provide the first opportunity to directly compare [zanidatamab] against the current first-line GEA standard of care, Herceptin plus chemo,” McAuley wrote in an August 5 report to clients.

“Other datasets we could see by year-end or early 2022 include Phase 2 data of zanidatamab plus chemo and tislelizumab in first- line GEA; additional Phase 1 data of zanidatamab plus chemo in third-line breast cancer; and Phase 2 data of zanidatamab plus chemo in first-line breast cancer,” he said.

McAuley said Zymeworks has a strong balance sheet at $359.8 million in cash and short-term investments as of the end of its last reported quarter, enough to support the company’s ongoing trials.

“ZYME is well capitalized, has unique intellectual property and is executing on a strategy to generate revenue through multiple licensing agreements while conducting clinical trials and growing value of internal drug candidates,” said McAuley.

With the report, McAuley left unchanged his “Buy” rating and 12-month target of $60.50 per share, which at press time represented a projected return of 86 per cent.

Next up is specialty pharma company HLS Therapeutics (HLS Therapeutics Stock Quote, Charts, News, Analysts, Financials TSX:HLS), which is commercializing Vascepa to the Canadian market. Launched in February, 2020, Vascepa is a cardiovascular capsule with the active ingredient, icosapent ethyl (IPE), a unique form of eicosapentaenoic acid. 

Last month, the Toronto-based HLS announced that drug giant Pfizer would be coordinating the marketing of Vascepa, a move which Clarus Securities analyst Noel Atkinson said appears to give further validation to the drug’s commercial potential. Pfizer plans to devote over 60 marketing reps to Vascepa and target between 7,000 and 10,000 high-volume family physicians across the country.

“Pfizer appears to be a very attractive choice for a co-marketing partner; it has national reach and a strong reputation, and Vascepa is labeled to be taken in conjunction with a statin such as PFE’s Lipitor,” said Atkinson in an August 16 update to clients.

“We remain bullish on the potential for Vascepa to become a blockbuster drug in Canada. There remains significant potential for further increases in management’s Vascepa peak sales outlook, especially if family physicians (driven by broad and rapid deployment of marketing by Pfizer) embrace the drug as a “top-of-mind” complement to statins for CV risk reduction and in turn drive stronger patient adoption. HLS also continues to have a solid balance sheet and significant cash flow from the rest of its portfolio,” Atkinson wrote.

The analyst reiterated his “Buy” rating with the August 16 update along with raising his target from $32.50 to $33.00, which represented at the time of publication a projected return of 100 per cent.

Last we have Oakville, Ontario’s Cardiol Therapeutics (Cardiol Therapeutics Stock Quote, Charts, News, Analysts, Financials TSX:CRDL), which works on clinically-based pharmaceutical cannadibiol (CBD) therapies for heart disease. CardiolRx is the company’s lead product, which last month announced US FDA clearance to proceed with an Investigational New Drug (IND) application to start a Phase 2 trial with CardiolRx and its effect on myocardial recovery in patients with acute myocarditis. Also last month, Cardiol announced enrolment of its first patient in a LANCER Phase 2/3 trial of CardiolRx in high-risk patients hospitalized with COVID-19.

The two together are making 2022 an inflection point year for Cardiol, according to Raymond James analyst Rahul Sarugaser, who delivered an update to clients on CRDL on August 24.

“Submission of LANCER to FDA for NDA review, plus possible interim readouts from the acute myocarditis trial — if both are successful — portend individual clinical program valuations of $459 million and $281 million, respectively,” Sarugaser wrote.

“We see the FDA’s acceptance of CRDL’s IND application for its Phase II study in acute myocarditis as a very positive step in CRDL’s prevailing mission to address inflammatory heart disease with its proprietary formulations of pharmaceutical cannabidiol (CBD),” he said.

With the update, Sarugaser maintained his “Outperform 2” rating while raising his target from $4.50 to $5.00 per share, which at press time represented a projected one-year return of 31.2 per cent.

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.

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