ZYME: Royalty Model Will Benefit From Positive HER2 Gastric Cancer Data

Analysts nudged their fair value estimate for Zymeworks slightly higher, from $34.20 to $34.50. This reflects growing confidence that the company’s shift toward a royalty aggregator model, coupled with strong HERIZON-GEA-01 data for Ziihera and encouraging early ZW191 results, can drive faster revenue growth and improved profitability.

Analyst Commentary

Analysts are broadly constructive on Zymeworks, highlighting both the de risked nature of its lead assets and the upside from its emerging royalty platform, while still flagging execution risks around the new strategy.

Bullish Takeaways

• Bullish analysts are lifting price targets into the mid to high 30s and low 40s, pointing to upside versus current trading levels as HERIZON GEA 01 and early ZW191 data are incorporated into models.
• Several models attribute roughly the high 20s per share to existing zani royalties and milestones alone, implying the current share price undervalues both the zani franchise and the broader pipeline.
• Positive HERIZON GEA 01 results, with Ziihera showing statistically significant progression free survival benefits in first line HER2 positive gastroesophageal adenocarcinoma, support expectations that zani could become standard of care and expand into additional indications.
• Early ZW191 dose escalation data, including an encouraging response rate and a potentially wider therapeutic window, are seen as validating the ADC platform and adding a second value driver beyond zani.

Bearish Takeaways

• Bearish analysts, while raising targets, maintain more neutral ratings and question the durability of a royalty driven growth model beyond zani until there is greater visibility on additional partnered assets and deal terms.
• There is caution that execution on the strategic pivot from traditional R and D biotech to royalty aggregator will require disciplined capital allocation and partner selection to sustain long term growth.
• Some valuation frameworks embed meaningful success probabilities for pipeline expansion and new ADC programs, leaving downside risk if subsequent data sets fail to replicate the strength of the initial ZW191 readout.
• Uncertainty around timing and magnitude of future milestone receipts and royalty ramps introduces potential volatility to near term revenue trajectories, which could weigh on multiples if clinical or commercial timelines slip.

What's in the News

• Zymeworks announced positive topline Phase 3 HERIZON GEA 01 results for Ziihera (zanidatamab) in first line HER2 positive gastroesophageal adenocarcinoma, building on its existing Breakthrough Therapy, Fast Track, Orphan Drug, and accelerated or conditional approvals across the U.S., Europe, China, and other regions (Key Developments, Product Related Announcements).
• The Board of Directors authorized a new share repurchase plan on November 18, 2025, allowing Zymeworks to buy back up to $125 million of its common stock, reinforcing capital return to shareholders (Key Developments, Buyback Transaction Announcements).
• Under its prior buyback program announced August 1, 2024, Zymeworks has completed repurchases totaling 3,984,470 shares, representing 5.53% of shares outstanding, for $52.74 million as of November 4, 2025 (Key Developments, Buyback Tranche Update).
• Preliminary Phase 1 data for ZW191, an ADC targeting folate receptor alpha, showed a 44% objective response rate across all evaluable patients and a manageable safety profile with no serious treatment related adverse events, supporting further development in advanced solid tumors (Key Developments, Product Related Announcements).
• The company highlighted ZW191 at the AACR NCI EORTC Conference via an accepted poster presentation, emphasizing its differentiated ADC design, proprietary topoisomerase 1 payload, and potential to address a high proportion of ovarian and lung adenocarcinomas (Key Developments, Product Related Announcements).

Valuation Changes

• Fair Value Estimate has risen slightly, moving from $34.20 to $34.50 per share, reflecting modestly higher expectations for long term cash flows.
• Discount Rate has inched up from 6.99% to 7.03%, modestly increasing the hurdle rate applied to future earnings and partially offsetting valuation upside.
• Revenue Growth has been revised upward, with the long term assumption increasing from approximately 18.9% to 19.5%, incorporating stronger contributions from Ziihera and ZW191.
• Net Profit Margin has improved meaningfully in forecasts, rising from about 2.8% to 3.9%, signaling higher expected operating leverage as the royalty model scales.
• Future P/E multiple has been reduced significantly, from roughly 601x to 429x, indicating lower reliance on multiple expansion and greater emphasis on fundamental earnings growth.