Last Update 03 Feb 26

Fair value Increased 3.23%

ZYME: Royalty Model Will Be Driven By Positive HER2 Gastric Cancer Data

Narrative Update

Analysts have nudged their blended price target for Zymeworks higher from about $34.50 to roughly $35.62 as they factor in the company’s shift toward a royalty-focused model around zani, positive HERIZON-GEA data for Ziihera, and updated views on future profitability and P/E assumptions.

Analyst Commentary

Street research on Zymeworks is clustering around two main themes: the shift toward a royalty-focused model centered on zani, and the impact of recent clinical data for Ziihera and early pipeline assets. Here is how bullish and cautious voices are framing it.

Bullish Takeaways

Bullish analysts see the transition toward a revenue-generating royalty model as a key support for valuation, arguing that current zani-related royalties and milestones alone account for a large portion of their price targets.
Several firms point to positive HERIZON-GEA-01 data for Ziihera in first-line HER2-positive gastroesophageal adenocarcinoma as a key driver, with some models assigning higher probabilities of success that support higher target prices.
Some bullish analysts expect Ziihera plus chemotherapy, and combinations with Tevimbra, to back meaningful improvements in progression-free survival versus control regimens, which in their view strengthens the commercial outlook for zani-linked economics.
Early readouts for ZW191 and the now-enrolling ZW251 trial are viewed as encouraging for the broader ADC platform, with the potential to add longer term growth optionality on top of the current royalty stream.

Bearish Takeaways

More cautious analysts acknowledge upside in the partnership approach, but remain wary of how repeatable the royalty-driven strategy is beyond zani until there is clearer visibility on additional partnered programs.
Some see execution risk around fully realizing the value implied by zani milestones and royalties, including timing and magnitude of potential payments relative to current expectations.
There is also an undercurrent of concern that investor enthusiasm around HERIZON-GEA-01 and early ADC data could run ahead of what has been clinically and commercially validated to date.
A more neutral stance from certain firms, despite higher price targets, reflects caution on how quickly Zymeworks can translate its clinical and royalty assets into consistent, diversified revenue growth.

What's in the News

Zymeworks announced positive efficacy and safety results from the Phase 3 HERIZON-GEA-01 trial of Ziihera in first line HER2+ gastroesophageal adenocarcinoma, with both Ziihera based arms showing statistically significant and clinically meaningful progression free survival versus trastuzumab plus chemotherapy, and one arm also showing a statistically significant overall survival benefit. (Company announcement, ASCO GI 2026)
Under existing agreements with Jazz and BeOne Medicines, the company is eligible for up to US$440.0m in potential milestone payments tied to future regulatory approvals for Ziihera in gastroesophageal adenocarcinoma, alongside potential future milestones and royalties for additional Ziihera indications. (Company announcement)
Zymeworks announced positive topline results from an earlier readout of the Phase 3 HERIZON-GEA-01 trial, with Ziihera in combination with chemotherapy, with or without Tevimbra, being studied across multiple HER2 expressing solid tumors and supported by U.S. and European regulatory designations in biliary tract cancer and gastroesophageal adenocarcinoma. (Company announcement)
The Board of Directors authorized a share repurchase program for up to US$125m of common stock, with the stated goal of reducing share count while maintaining cash resources for operations, growth investments and future opportunities. (Company announcement)
Between July 1, 2025 and November 4, 2025, Zymeworks repurchased 1,439,068 shares for US$22.74m, bringing total buybacks under the August 1, 2024 authorization to 3,984,470 shares for US$52.74m, or about 5.53% of shares. (Company filing)
Ms. Leone Patterson, Chief Financial and Business Officer, is scheduled to depart during the first quarter of 2026, with Chair, President and CEO Kenneth Galbraith appointed as interim Chief Financial Officer from January 9, 2026 while the company searches for a permanent CFO. (Company announcement)

Valuation Changes

Fair Value: Adjusted slightly higher from about US$34.50 to roughly US$35.62 per share.
Discount Rate: Held essentially steady, moving from about 7.03% to roughly 7.04%.
Revenue Growth: Trimmed modestly, shifting from about 19.51% to roughly 18.43%.
Net Profit Margin: Reduced meaningfully, moving from about 3.91% to roughly 1.42%.
Future P/E: Reset to a much higher level, rising from about 429x to roughly 1,251x and implying a very large multiple on modeled earnings.

Diversified oncology pipeline, proprietary platforms, and global partnerships position the company for sustained revenue growth, earnings upside, and improved margins through a capital-light model.
Advancing clinical milestones, strong R&D productivity, and pharma collaborations increase royalty streams, stability, and long-term asset valuations.
Heavy reliance on milestone payments and early pipeline assets, combined with high expenses and rising competition, heightens risks to revenue stability, market share, and long-term profitability.

Catalysts

About Zymeworks

A clinical-stage biotechnology company, discovers, develops, and commercializes biotherapeutics for the treatment of cancer, and autoimmune and inflammatory diseases (AIID).What are the underlying business or industry changes driving this perspective?

The increasing global incidence of cancer and chronic diseases, driven by an aging population, is expanding the potential market for Zymeworks' oncology and biologic therapies, positioning its diversified pipeline (including ADCs like ZW171, ZW191, ZW251, and zanidatamab) for long-term addressable revenue growth as regulatory approvals, new indications, and commercial launches progress.
The advancing acceptance of personalized and precision medicine is accelerating investment and deal activity in antibody engineering, directly aligning with Zymeworks' core platforms (Azymetric™ and EFECT™), which have already attracted multiple high-value partnerships. This trend increases the probability of further milestone and royalty revenue, providing upside to earnings and supporting healthier net margins via a capital-light partnership model.
Zymeworks' strategic partnership and out-licensing approach with large pharmaceutical companies (e.g., Jazz, BeiGene, BMS, J&J) is generating significant near-term and long-term non-dilutive cash inflows, diversifying revenue streams and reducing the R&D burn rate, thus supporting better EBITDA margins and enhanced cash flow stability as the partnered assets advance.
Expected regulatory milestones and successful late-stage clinical readouts (notably the Phase III HERIZON-GEA-01 trial for zanidatamab) could trigger substantial milestone payments and sustained royalty streams, driving top-line revenue growth while exercising financial discipline to avoid proportionately increasing operating expenses-improving operating leverage and net income potential.
Ongoing demonstration of productivity from Zymeworks' proprietary antibody platforms and the progression of pipeline and partnered programs (evidenced by multi-asset clinical advancement and preclinical innovation) increases the likelihood of expanded future collaborations and transactions in an environment where large pharma seeks external innovation, elevating long-term asset valuations and supporting earnings growth.

Zymeworks Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Zymeworks's revenue will grow by 7.1% annually over the next 3 years.
Analysts are not forecasting that Zymeworks will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Zymeworks's profit margin will increase from -60.0% to the average CA Biotechs industry of 16.1% in 3 years.
If Zymeworks's profit margin were to converge on the industry average, you could expect earnings to reach $24.2 million (and earnings per share of $0.26) by about September 2028, up from $-73.7 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 97.3x on those 2028 earnings, up from -14.4x today. This future PE is greater than the current PE for the CA Biotechs industry at 15.5x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Zymeworks Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Significant near-term and medium-term revenues are highly dependent on milestone payments and royalties from partnered assets (e.g., zanidatamab with Jazz, BeOne, and BeiGene), which exposes Zymeworks to the risk of partner execution, regulatory delays, or commercial underperformance-reducing top-line revenue and operating cash flow prospects if any milestones are missed or sales underwhelm.
The wholly owned pipeline is concentrated in early-stage assets (e.g., ZW171, ZW191, ZW251, and ZW1528 are only in Phase I or preclinical development), so any clinical or regulatory failures could eliminate future revenue streams, damage net margins, and heighten the risk of prolonged negative earnings.
Substantial R&D and operating expenses, though currently disciplined, are only offset by irregular milestone payments rather than recurring product sales-if expected milestones or royalties are delayed, Zymeworks may need to raise dilutive capital or cut R&D, impacting sustainable profitability and long-term shareholder value.
Intensifying competition from both established pharma and new entrants in antibody-drug conjugates and multispecific therapeutics, particularly as large players harness AI and next-generation technologies, threatens Zymeworks' competitive moat and could reduce future partnership opportunities, pipeline value, and eventual market share-pressuring revenue growth and valuation.
The international oncology and biologics drug reimbursement environment continues to tighten, with increased regulatory scrutiny on drug approval, pricing, and trial design; any adverse regulatory or payer action (e.g., price controls in the US/EU, stricter trial endpoints) could compress future royalty streams and reduce the earnings potential from both partnered and wholly owned assets.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $21.05 for Zymeworks based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $30.0, and the most bearish reporting a price target of just $12.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $150.9 million, earnings will come to $24.2 million, and it would be trading on a PE ratio of 97.3x, assuming you use a discount rate of 6.8%.
Given the current share price of $14.14, the analyst price target of $21.05 is 32.8% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Raise Zymeworks Target on Pipeline Progress While Weighing Risks and Valuation Changes