Leerink Rates Zogenix Outperform Ahead Of AES Meeting

Leerink resumed coverage of Zogenix, Inc. ZGNX with an Outperform rating and $17 price target ahead of multiple data readouts for lead product ZX008 across orphan epilepsies.

Zogenix is a specialty biotechnology company focused on developing ZX008 for Dravet syndrome and orphan epilepsy, and Relday for schizophrenia.

Meanwhile, compelling clinical data in Dravet syndrome from peer GW Pharmaceuticals PLC- ADR GWPH's Epidiolex has kindled investors curiosity about new developments in the orphan epilepsy space.

Related Link: GW Pharma Rapidly Approaching CNS Launch; Leerink Starts Coverage With $162 Target

In addition, Zongenix will present a preliminary data in an Lennox Gastaut Syndrome (LGS) pilot trial at AES in December, while results from the phase 3 ZX008 are expected in the second quarter 2017. Notably, ZX008 has showed positive results in patients with Dravet and/or refractory seizures in anecdotal and open-label data.

"[W]e are encouraged that the 75%+ seizure reductions of observed on '008 in highly refractory populations with Dravet Syndrome are orders of magnitude larger than the placebo rate observed in recent GWPH pivotal trials," analyst Paul Matteis wrote in a note.

"At current levels, we believe conservative assumptions (a 40% probability-of-success [POS]) enable one to derive meaningful upside to ZGNX's stock price which appears to highly risk-adjust ZX008's probability in Phase III," Matteis continued.

Further, with $127.8 million on its balance sheet, Zogenix is well capitalized through 2017, beyond major data readouts.