Tuesday, Citi initiated coverage on Zenas Biopharma (NASDAQ:ZBIO) stock, a biotechnology company, with a Buy rating and a price target of $27.00.
The firm's optimistic outlook is based on the potential of Zenas' lead drug candidate, obexelimab, which is being developed for multiple indications within the inflammation and immunology (I&I) space.
Obexelimab is seen as a key asset for Zenas, with the potential to treat a range of diseases, including IgG4-related disease (IgG4-RD), multiple sclerosis (MS), and systemic lupus erythematosus (SLE). Citi's analysis suggests that positive Phase 3 data for IgG4-RD could set the stage for the drug's success in larger markets.
The sales of Kesimpta and Ocrevus, which are estimated at approximately $9 billion for MS, and Benlysta, with an estimated market of $1.5 billion for SLE, indicate the substantial revenue potential for obexelimab.
The analyst highlighted competitor data from Amgen/Horizon's Uplizna, which has implications for obexelimab's prospects. The analyst believes obexelimab's method of B-cell inhibition, which is perceived as safer than current therapies that carry risks of opportunistic infections, could offer a competitive advantage.
Additionally, the convenience of obexelimab being self-administered at home may make it an attractive option for patients, potentially leading to a strong commercial positioning.
Citi also expressed confidence in Zenas Biopharma's management team, which has a history of commercial success and experience with large-pharma acquisitions, further supporting the company's potential for growth.
In other recent news, Zenas Biopharma has been the focus of several analyst firms, including Morgan Stanley, Guggenheim, and Jefferies, primarily due to its lead drug, obexelimab.
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, Guggenheim initiated coverage with a Buy rating and a price target of $45, highlighting obexelimab's promising mechanism of action and potential to generate approximately $1.8 billion in global risk-adjusted peak sales.
Jefferies also 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.
Zenas Biopharma is currently advancing its Phase 3 study for obexelimab in IgG4-Related Disease (IgG4-RD), with results expected in late 2025. Additionally, Phase 2 trials for Multiple Sclerosis (MS) and Systemic Lupus Erythematosus (SLE) are ongoing, with data anticipated in 2025 and early 2026, respectively. These developments indicate Zenas Biopharma's potential for growth in the near future.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Citi's optimistic outlook on Zenas Biopharma (NASDAQ:ZBIO). The company's market capitalization stands at $781.24 million, reflecting investor interest in its potential. However, it's important to note that Zenas is not currently profitable, with a negative gross profit margin of -72.45% in the last twelve months as of Q2 2023.
InvestingPro Tips highlight that ZBIO holds more cash than debt on its balance sheet, which could provide financial flexibility as it advances its drug candidates. Additionally, the stock has seen a significant return over the last week, with a 9.74% price increase, possibly reflecting market enthusiasm following Citi's coverage initiation.
These insights align with the article's focus on Zenas' potential in the biotech space, particularly with its lead drug candidate obexelimab. The company's strong cash position could be crucial for funding ongoing research and development efforts in the competitive I&I market.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for ZBIO, providing a deeper understanding of the company's financial health and market position.
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