Zevra Therapeutics stock target cut, retains buy rating on recent capital raise By Investing.com

On Wednesday, Canaccord Genuity adjusted its financial outlook for Zevra Therapeutics, Inc. (NASDAQ:ZVRA) shares, reducing the price target to $22.00 from the previous $24.00. Despite the downward revision, the firm maintained a Buy rating on the biopharmaceutical company’s shares.

The adjustment follows Zevra’s recent capital raise, which has extended the company’s cash runway until the first quarter of 2027. This projection does not account for potential revenue from the post-approval sales of arimoclomol or the possible monetization of a Priority Review Voucher (PRV). The analyst noted that while arimoclomol could receive approval in the near term, the model conservatively forecasts the first commercial sales in the United States to be recognized in 2025.

Moreover, Canaccord Genuity increased the probability of arimoclomol’s approval in the U.S. market from 60% to 90%. For the European market, the probability of approval is now placed at 60%, with a potential launch envisioned in 2026. The peak sales estimates for the U.S. and Europe by 2035 are maintained at $124.1 million and $189.3 million, respectively, closely aligning with previous models.

The report also mentions Zevra’s other product, Olpruva, stating that no significant changes have been made to the sales estimates for this product. However, the launch trends will be monitored quarterly due to the low intra-quarter visibility. Olpruva is distributed through specialty pharmacies, which makes it difficult to accurately capture prescription data through third-party tracking services.

Lastly, the analyst’s outlook for KP1077, Zevra’s treatment for idiopathic hypersomnia (IH) and narcolepsy, remains unchanged, with a 15% probability of approval 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 price target, reflecting the updated probabilities and launch timelines for Zevra’s therapeutic candidates.

In other recent news, Zevra Therapeutics has made significant strides in both clinical and financial areas. The firm’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, a drug under investigation for the treatment of Niemann-Pick disease type C.

Roth/MKM, maintaining a Buy rating on Zevra shares, underscored the potential for near-term FDA approval of the drug, given the positive outcomes demonstrated in the trials.

Zevra also reported a net revenue of $4.4 million and a net loss of $19.9 million in the second quarter of 2024, alongside a successful public offering that raised approximately $64.5 million. These financial developments indicate the investment-heavy nature of the biotech industry, balanced by successful capital raising efforts.

Other notable strides 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 key drug candidates, including arimoclomol, could potentially be available in the market within 8 to 12 weeks post-approval.

InvestingPro Insights

In light of Canaccord Genuity’s revised outlook on Zevra Therapeutics, Inc. (NASDAQ:ZVRA), it’s pertinent to consider additional insights provided by InvestingPro. According to InvestingPro Tips, analysts have revised their earnings upwards for the upcoming period, signaling potential optimism in Zevra’s financial performance. However, they also anticipate a sales decline and a drop in net income for the current year, which could be factors to watch closely.

From a valuation standpoint, Zevra operates with a moderate level of debt and is currently trading at a high Price / Book multiple of 12.2, as per the last twelve months as of Q2 2024. Despite the challenges, the company has seen a strong return over the last three months, with a price total return of 69.21%. This robust short-term performance could be indicative of market sentiment and investors’ reaction to recent developments.

It is also worth noting that Zevra does not pay a dividend to shareholders, which might influence investment decisions for those seeking income-generating stocks. For those considering Zevra as an investment, additional InvestingPro Tips are available, offering further insights into the company’s financial health and market performance. There are 11 additional tips listed on InvestingPro for Zevra, which can be accessed for more comprehensive analysis.

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