Zymeworks (ZYME): Zanidatamab’s Strong Phase 3 HERIZON-GEA Data, Global Milestones, and Royalty Model Support Buy Rating

LifeSci Capital analyst Charles Zhu maintained a Buy rating on Zymeworks today and set a price target of $34.00.

Charles Zhu has given his Buy rating due to a combination of factors tied to the strength of zanidatamab’s Phase 3 HERIZON-GEA data and the resulting commercial prospects. The trial demonstrated a notable improvement in median progression-free survival over the current standard trastuzumab-based regimen, and the overall survival benefit was robust across both the doublet and triplet arms. Importantly, these outcomes compare favorably to KEYNOTE-811 on a cross-trial basis, even though the HERIZON-GEA trial had a less PD-L1–enriched population, underscoring the broad utility of zanidatamab in HER2+ metastatic gastroesophageal adenocarcinoma. The safety profile, while showing increased diarrhea, appears better managed with prophylaxis than in earlier studies, and discontinuation rates remain acceptable for frontline therapy.
Given these data, Zhu views zanidatamab as well positioned to become a preferred HER2-directed option in HER2+ mGEA regardless of PD-L1 status, with additional upside from potential expansion into HER2+ breast cancer where a Phase 3 trial is ongoing. He also highlights the significant non-dilutive value from up to $440 million in regulatory milestone payments tied to approvals in the US, EU, Japan, and China, which could materially strengthen Zymeworks’ financial profile. When combined with the company’s move toward a royalty-focused model and a share repurchase program, Zhu sees an attractive risk-reward setup that supports his Buy rating on ZYME.