Morgan Stanley maintained a positive outlook on Zai Lab (NASDAQ:ZLAB) shares, reiterating an Overweight rating with a $50.00 price target. The endorsement follows the U.S. Food and Drug Administration's (FDA) approval of COBENFY™, a treatment for schizophrenia in adults, which is a significant development for Zai Lab's partner, Bristol Myers Squibb (NYSE:BMY).
Zai Lab had previously secured the Greater China rights to COBENFY™, known scientifically as xanomeline/trospium chloride or "KarXT," from Karuna Therapeutics (NASDAQ:KRTX) for a deal valued at $187 million. This was prior to Karuna's acquisition by Bristol Myers Squibb for $14 billion last year.
The FDA's approval of COBENFY™ is notable for its clean label, which excludes a class black-box warning, warnings for tardive dyskinesia, or the need for extensive cardiovascular risk monitoring. These aspects were considered potential risks in Morgan Stanley's U.S. biopharma team's preview of the Prescription Drug User Fee Act (PDUFA) decision.
Morgan Stanley anticipates that the approval, particularly the clean label and the premium set for the wholesale acquisition cost (WAC), will positively influence Zai Lab's stock. The firm's projections for COBENFY™'s risk-adjusted revenue by 2030 estimate $600 million, which surpasses the Visible Alpha consensus of $441 million.
The approval and subsequent commercial prospects of COBENFY™ are expected to have a moderately positive impact on Zai Lab's financial performance and share value in the coming years.
Bristol-Myers Squibb (NYSE:BMY) has been making significant strides in the pharmaceutical industry. The company's new schizophrenia drug, Cobenfy, recently received FDA approval, a notable development given the absence of the black box warning typically associated with traditional antipsychotic therapies. Analysts from JPMorgan, BMO Capital, and Goldman Sachs have responded positively to this development, maintaining their ratings and adjusting price targets for the company.
Furthermore, Bristol-Myers Squibb reported sustained reductions in brain volume loss in patients with relapsing forms of multiple sclerosis treated with Zeposia, according to the Phase 3 DAYBREAK trial. The company's blood thinner Eliquis has also been selected by the Biden administration for price negotiations with the Medicare health program.
In other developments, the firm's medication Cobenfy is expected to be marketed at a list price of $1,850 for a 30-day supply, and analysts predict it could reach peak sales of $2.4 billion for Schizophrenia and an additional $3.9 billion for Alzheimer's psychosis.
InvestingPro Insights
As Bristol Myers Squibb (NYSE:BMY) celebrates the FDA approval of COBENFY™, InvestingPro data reveals some interesting insights about the company's financial health. BMY's market capitalization stands at $101.61 billion, reflecting its significant presence in the pharmaceutical industry. The company's revenue for the last twelve months as of Q2 2024 was $46.51 billion, with a modest growth of 2.93% over the same period.
InvestingPro Tips highlight that BMY has maintained dividend payments for an impressive 54 consecutive years, demonstrating a strong commitment to shareholder returns. This is further supported by the current dividend yield of 4.79%, which may be attractive to income-focused investors. Additionally, BMY's valuation implies a strong free cash flow yield, suggesting efficient cash generation relative to its market value.
These insights align with the article's focus on BMY's strategic partnerships and product approvals, indicating the company's ongoing efforts to maintain its market position and financial stability. For investors interested in a deeper analysis, InvestingPro offers 10 additional tips for BMY, providing a more comprehensive view of the company's prospects.
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