Chair and CEO Kenneth Galbraith found a formula for Zymeworks' revival
The biotech company’s vital signs have improved since last year’s foiled takeover
The stock: We were ready to consign Zymeworks (NASDAQ:ZYME) to the list of once brightly burning B.C.-based biotechs—it was at one point the most valuable life sciences startup in Canada—to ignominiously flame out. (See Quadra Logic Technologies, Angiotech Pharmaceuticals, Cardiome Pharma.) But the developer of biological cancer drugs has staged something of a comeback since almost being taken out by an offshore hedge fund last year.
The drivers: Following a shakeup a year ago that saw founder Ali Tehrani step down as CEO and former director (and QLT veteran) Kenneth Galbraith take over, the company was the subject of a hostile takeover bid by Dubai-based All Blue Capital. Over the spring and summer, Zymeworks’ board rejected the offer and adopted a poison pill resolution to fend off future bids of the sort.
Then in October, it signed a licensing deal with Ireland-based Jazz Pharmaceuticals PLC for a cancer-fighting antibody it has in development, zanidatamab. The agreement has since seen Zymeworks take in US$375 million in milestone payments. “Through a series of financial initiatives successfully executed during 2022, including the Jazz collaboration that closed in the fourth quarter, we were able to transform our financial position to ensure adequate funding of our planned operations over the next several years,” Galbraith said in a corporate update this month.
Since October, the stock likewise appears to have turned a corner, more than doubling to crack US$10 on the NASDAQ as of Tuesday.
Word on the street: Of the 10 analysts who cover the company, six have a “buy” rating and three are on “hold.” The average 12-month target price is US$14. On January 15, a major shareholder, Ecor1 Capital LLC, increased its stake by 920,000 shares at a cost of US$7 million.
Coming & going: Vancouver-based investment bank Canaccord Genuity Group (TSX:CF) is the subject of a management buyout bid announced Jan. 9 that has seen its stock soar nearly 50 percent this month. Worth $1.1 billion or $11.25 per share, the offer is valid for 105 days. The company’s board has not accepted the deal.