On Wednesday, Canaccord Genuity adjusted its financial outlook for Zevra Therapeutics, Inc. (NASDAQ: ZVRA) stock, lowering the price target to $22.00 from $24.00 previously. Despite the downward revision, the firm maintained a Buy rating on the biopharmaceutical company’s stock.
The adjustment follows Zevra’s recent capital raise, which has extended the company’s liquidity through the first quarter of 2027. This projection does not take into account potential revenue from post-approval arimoclomol sales or potential monetization of a priority review bond (PRV). The analyst noted that while arimoclomol could receive approval in the near term, the model conservatively projects that first commercial sales in the United States will be recognized in 2025.
In addition, Canaccord Genuity has increased the probability of approval for arimoclomol in the US market from 60% to 90%. For the European market, the probability of approval now stands at 60%, with a potential launch planned for 2026. Peak sales estimates for the US and Europe for 2035 remain at $124.1 million and $189.3 million, respectively, closely in line with previous models.
The report also mentions Zevra’s other product, Olpruva, and states that no significant changes have been made to sales estimates for this product. However, launch trends will be monitored on a quarterly basis due to low intra-quarter visibility. Olpruva is distributed through specialty pharmacies, making it difficult to accurately capture prescription data through third-party tracking services.
Finally, analysts’ outlook for KP1077, Zevra’s treatment for idiopathic hypersomnia (IH) and narcolepsy, remains unchanged, with a 15% approval probability for each indication and projected U.S. market launches in 2027 and 2028.
The revised discounted cash flow (DCF) analysis is the basis for the new $22 target price and reflects updated probabilities and launch timelines for Zevra’s therapeutic candidates.
In other recent news, Zevra Therapeutics has made significant progress in both clinical and financial areas. The company’s recent clinical data, presented at the Society for the Study of Inborn Errors of Metabolism (SSIEM) 2024 event, highlighted promising results from a Phase 2/3 trial of arimoclomol, an investigational drug for the treatment of Niemann-Pick disease type C.
Roth/MKM, which maintains a Buy rating on Zevra shares, highlighted the potential for FDA approval of the drug in the near term, given the positive results demonstrated in the trials.
Zevra also reported net income of $4.4 million and a net loss of $19.9 million in the second quarter of 2024, along with a successful public offering that raised approximately $64.5 million. These financial developments indicate the investment-intensive nature of the biotech industry, balanced by successful capital raising efforts.
Other notable developments include the continuation of the Phase III trial for celiprolol, targeting vascular Ehlers-Danlos syndrome, and the progression of OLPRUVA for urea cycle disorders and KP1077 for idiopathic hypersomnia. These are recent developments that reflect Zevra Therapeutics’ commitment to addressing unmet medical needs in the rare disease sector. The company’s lead drug candidates, including arimoclomol, could be available on the market within 8 to 12 weeks after approval.
InvestingPro Insights
In light of Canaccord Genuity’s revised outlook on Zevra Therapeutics, Inc. (NASDAQ:ZVRA), it is pertinent to consider additional information provided by InvestingPro. According to InvestingPro Tips, analysts have revised their earnings upwards for the coming period, indicating potential optimism on Zevra’s financial performance. However, they also anticipate declining sales and a drop in net income for the current year, which could be factors to watch closely.
From a valuation perspective, Zevra operates with a moderate level of debt and is currently trading at a high price-to-book multiple of 12.2, as it has over the past twelve months to Q2 2024. Despite the challenges, the company has seen solid returns over the past three months, with a total return in terms of price of 69.21%. This strong near-term performance could be indicative of market sentiment and investor reaction to recent events.
It is also worth noting that Zevra does not pay dividends to shareholders, which could influence the investment decisions of those looking for income-producing stocks. For those considering investing in Zevra, additional tips are available from InvestingPro that offer further insight into the company’s financial health and market performance. There are 11 additional tips listed on InvestingPro for Zevra, which can be accessed for a more comprehensive analysis.
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