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Zogenix Has $3.4B Opportunity With Pediatric Epilepsy Asset, BofA Says In Bullish Initiation

Zogenix Has $3.4B Opportunity With Pediatric Epilepsy Asset, BofA Says In Bullish Initiation
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Zogenix, Inc. (NASDAQ: ZGNX)'s lead asset ZX008 presents a multibillion-dollar opportunity, according to Bank of America Merrill Lynch.

The Analyst

Analyst Tazeen Ahmad initiated coverage of Zogenix with a Buy rating and $63 price target, suggesting 29-percent upside.

The Thesis

BofA's worldwide, risk-adjusted peak sales estimate for Zogenix' lead asset ZX008 is $1.5 billion in 2029, comprising a $604 million opportunity in Dravet syndrome, $503-million in Lennox-Gastaut syndrome and $386 million in other pediatric epilepsy conditions, Ahmad said in a Friday note. (See the analyst's track record here.) 

An estimate not adjusted for risk gives a peak worldwide sales estimate of $3.4 billion across all indications, which Ahmad said is higher than the peak sales achieved by other anti-epileptic drugs and anticonvulsants. 

The candidate showed the best efficacy so far in the two Phase 3 studies for Dravet, with NDA and MAA filings expected by the end of 2018, the analyst said. ZX008 is in a Phase 3 trial for Lennox-Gastaut, with the readout expected in late 2019 or early 2020.

"With positive efficacy and safety, we believe ZX008 can penetrate the pediatric epilepsy market in DS, LGS and off-label use," Ahmad said. 

BofA anticipates a positive Phase 3 readout from the LGS study, a faster-than-expected ramp rate and lower-than-expected competition from other products such as GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH)'s Epidiolex posing upside risk to its thesis.

Downside risks include a failure to reach commercialization for LGS, a lower-than-expected off-label offtake or any cardiovascular risk that triggers long-term safety concerns, Ahmad said. 

The Price Action

Zogenix shares have gained about 22 percent year-to-date.

Related Links:

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Jefferies Projects $573M Peak Sales For Cara Therapeutics' Lead Candidate

Latest Ratings for ZGNX

Nov 2018Leerink SwannInitiates Coverage OnOutperform
Sep 2018Bank of AmericaInitiates Coverage OnBuy
Sep 2018Northland SecuritiesInitiates Coverage OnOutperform

View More Analyst Ratings for ZGNX
View the Latest Analyst Ratings

Posted-In: Bank of America Merrill Lynch Tazeen AhmadAnalyst Color Biotech Price Target Initiation Analyst Ratings General Best of Benzinga


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