2 Names Barclays Is Now Bearish On In Biotech

z,pz.Even as Barclays initiated coverage of the U.S. small- and mid-cap biotechnology industry with a positive view, it was bearish on Cascadian Therapeutics Inc (USA) CASC and Zymeworks Inc ZYME.

The firm initiated coverage of Cascadian Therapeutics with an Underweight rating and a $4 price target, while it downgraded shares of Zymeworks from Overweight to Underweight. The price target on Zymeworks was lowered from $20 to $8.

Cascadian Therapeutics shares were slumping 2.47 percent to $3.55, while Zymeworks was down 5.56 percent to $7.81.

Lack Of Near-Term Catalysts Hurts Cascadian

Analysts Gena Wang, Xiaobin Gao and Geoff Meacham attributed their Underweight rating on Cascadian to a lack of near-term catalysts, which rendered other names in their coverage universe more attractive within the next 12 months.

This is despite the company's lead candidate tucatinib having a differentiated profile regarding safety and brain activity in HER2+ metastatic breast cancer according to the analysts. The analysts noted that the initial phase 1b data from the lead asset showed promising efficacy.

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Barclays said tucatinib has embarked on rapid path toward approval, with the company having received confirmation from both the FDA and EMA to expand its HER2CLIMB trial to support future registration. The firm believes investigator-sponsored trials will provide some near-term data flow on the lead candidate.

Low Expectations On Zymeworks' Lead Asset

Barclays' Underweight rating on Zymeworks was attributed to its low expectations on the company's lead asset HER2 bispecific antibody ZW25 in HER2 high and medium expressed breast cancer. The firm sees limited returns to investors before meaningful clinical data readout from the next generation asset ZW33, which is expected in 2019.

"We believe ZW33 with additional cytotoxin conjugation could provide an improved clinical efficacy based on preclinical data," the firm added.

Meanwhile, the firm noted that the company has four strong technology platforms independently validated by multiple partnerships with major Pharma, capable of designing protein therapeutics.

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