On Thursday, Guggenheim reiterated its Buy rating on shares of Zenas Biopharma (NASDAQ: ZBIO), expressing confidence in the company's lead drug candidate, obexelimab. The firm's optimism is rooted in the drug's unique mechanism of action and its potential across multiple indications.
With analyst price targets ranging from $27 to $45, significantly above the current trading price of $9.16, InvestingPro data shows strong institutional confidence in the company's potential.
Obexelimab, a CD19xFcγRIIb bifunctional inhibiting monoclonal antibody (mAb), has recently demonstrated positive interim results in a study for warm Autoimmune Hemolytic Anemia (wAIHA), indicating its effectiveness in a new subcutaneous (SC) formulation.
Guggenheim's analysis suggests that obexelimab's method of action, which inhibits rather than depletes B cells, offers a potentially safer alternative to existing treatments due to the quick recovery of B cells after drug withdrawal.
The firm also highlights the convenience of obexelimab's once-weekly SC administration, which could provide continuous B cell suppression and avoid the "wearing-off" effects seen with other B cell depleting therapies. Preclinical models suggest that obexelimab may be superior to anti-CD20 treatments in Relapsing Multiple Sclerosis (RMS), with the potential to delay disability progression.
In terms of efficacy, Guggenheim notes that obexelimab could achieve results similar to Amgen (NASDAQ:AMGN)'s Uplizna in treating IgG4-Related Disease (IgG4-RD), based on a Phase II open-label study that showed a 53% corticosteroid-free complete response rate, comparable to Uplizna's 58.5% in Phase III.
For Systemic Lupus Erythematosus (SLE), Zenas Biopharma's optimized SC formulation is anticipated to show a considerable probability of success in an ongoing Phase II trial, with data expected in the first half of 2026. With several clinical milestones on the horizon over the next six quarters, Guggenheim sees a favorable risk/reward balance for ZBIO's shares as the company moves into 2025.
This positive outlook comes even as Zenas Biopharma's stock has experienced a significant drop, falling by 50% since its initial public offering as of December 11, 2024, compared to a 4.2% decline in the broader biotech index. Trading near its 52-week low of $8.88, InvestingPro analysis indicates the stock is currently in oversold territory.
The company maintains a healthy financial position with a current ratio of 8.95, indicating strong liquidity to fund its clinical programs. According to InvestingPro, there are 12 additional key insights available for ZBIO that could help investors make more informed decisions about this developing story.
In other recent news, Zenas Biopharma has been the focal point of several analyst firms, including Citi, Morgan Stanley (NYSE:MS), Guggenheim, and Jefferies, primarily due to its lead drug, obexelimab. Citi initiated coverage with a Buy rating and a price target of $27.00, based on the potential of obexelimab in the inflammation and immunology space.
Morgan Stanley initiated coverage with a new Overweight rating and a price target of $40, citing the potential of obexelimab and upcoming Phase II and Phase III trial updates in 2025.
Meanwhile, Jefferies commenced coverage with a Buy rating and a price target of $35, estimating total peak adjusted revenues for Zenas Biopharma at approximately $1.6 billion. These recent developments indicate Zenas Biopharma's potential for growth in the near future.
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