As Zogenix Develops Its Seizure Treatment Pipeline, Analyst Predicts More Upside

Shares of Zogenix, Inc. ZGNX — a biopharma company,developing treatments for patients with rare central nervous system conditions with limited or no treatment options — could be in for further upside. This is on top of the triple-digit gains posted in late September following the release of positive trial results for its Dravet Syndrome, or DS, treatment candidate ZX007, in a late-stage study.

The Analyst

JMP Securities analyst Jason Butler initiated coverage of the company with a Market Outperform rating and $56 price target.

The Thesis

Confidence in the results could continue to strengthen, with the presentation of the results at the American Epilepsy Society meeting in December, Butler said in a note. (See Butler's track record here.) 

The results from Zogenix' second Phase 3 trial are expected to be released in the second quarter of 2018, Butler said. An NDA submission is likely in the second half of 2018, the analyst said. 

Butler estimates U.S. peak sales potential of about $750 million in DS, suggesting upside to the company's enterprise value of about $1.2 billion.

The analyst said further upside exists from the development of ZX008 in other seizure disorders, mainly Lennox-Gastaut syndrome. A Phase 3 trial for this indication is set to begin by the end of 2017, Butler said.

"We believe the potential for Z008 in seizure disorders beyond DS is currently underappreciated in the stock." 

The Price Action

At the time of writing, Zogenix shares were down 1.80 percent at $38.10. The shares are up a whopping 215 percent year-to-date. 

Related Links:

Attention Biotech Investors: Here Are November PDUFA Catalysts On The Horizon

Corium Q4 Sales Top Expectations Ahead Of Slew Of Near-Term Catalysts