On Wednesday, an analyst from H.C. Wainwright maintained a Buy rating on shares of Zevra Therapeutics, Inc. (NASDAQ:ZVRA), with a steady price target of $15.00. The firm's optimism is anchored on the upcoming FDA Advisory Committee meeting scheduled for August 2, 2024, which will review the New Drug Application (NDA) for arimoclomol, a potential treatment for Niemann-Pick disease type C (NPC).
The Genetic Metabolic Diseases Advisory Committee (GeMDAC), recently established in December 2023, will conduct its first NDA review during this meeting. Zevra Therapeutics has been preparing for this review since at least January. The company aims to address the unmet medical needs of NPC, a rare neurodegenerative disorder, with arimoclomol.
Zevra acquired arimoclomol in May 2022 and has since been working to address the FDA's concerns outlined in a Complete Response Letter (CRL) from June 2021. The analyst highlighted the drug's efficacy-safety profile supported by Phase 2/3 clinical data, four-year open-label extension data, and its continued use in an early access program (EAP) both in the U.S. and internationally.
The analyst's valuation of Zevra also considers the potential approval of arimoclomol, which could lead to a Priority Review Voucher estimated to be worth around $100 million, and projected peak sales of approximately $250 million.
Moreover, the company's already marketed product OLPRUVA and ongoing royalties and milestones from partner sales of Azstarys for ADHD contribute to its valuation. The firm also sees potential upside from KP1077, intended for idiopathic hypersomnia.
H.C. Wainwright's $15 price target is based on a discounted cash flow (DCF) method, factoring in a 50% probability of arimoclomol's successful approval and commercialization, which if fully realized would suggest a higher valuation of $24 per share.
In other recent news, Zevra Therapeutics has reported on its progress during Q1 2024, including the launch of OLPRUVA, preparations for the potential launch of Arimoclomol, and the advancement of the KP1077 program. The company has also secured a new credit facility providing up to $100 million in committed capital, extending its cash runway into 2026. Financial results reveal a net revenue of $3.4 million and a net loss of $16.6 million.
Zevra Therapeutics is also focusing on increasing reimbursement coverage for OLPRUVA, positioning it as a lower-cost alternative to RAVICTI. The company reported positive Phase 2 results for KP1077 in treating idiopathic hypersomnia. Despite increased R&D and administrative expenses, Zevra Therapeutics remains optimistic about its strategic priorities and upcoming catalysts in the second half of 2024.
These are some of the recent developments in the company. The company's focus areas include driving OLPRUVA's launch, preparing for Arimoclomol's potential launch, and advancing KP1077. It is worth noting that upcoming catalysts are expected in the second half of 2024.
InvestingPro Insights
As Zevra Therapeutics, Inc. (NASDAQ:ZVRA) anticipates the pivotal FDA Advisory Committee meeting for arimoclomol, the company's financial metrics and analyst outlooks provide additional context for investors. With a market capitalization of approximately $229.15 million, Zevra showcases impressive gross profit margins, as evidenced by a gross profit of $24.71 million and a margin of 89.19% in the last twelve months as of Q1 2024. However, the company is navigating through challenges, including a significant cash burn and expectations of a net income decline this year.
Investors may take note of the recent positive price momentum, with Zevra's stock experiencing a strong return over the last month of 18.0%, which aligns with the analyst's positive outlook. Moreover, three analysts have revised their earnings upwards for the upcoming period, reflecting a potential shift in sentiment.
On the flip side, Zevra operates with a moderate level of debt and has been unprofitable over the last twelve months, with a P/E ratio of -4.1. Despite these challenges, the company's liquid assets exceed its short-term obligations, providing some financial stability.
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