KYMR: Upcoming Atopic Dermatitis Data And Fast Track Status Will Drive Upside

Analysts have nudged their price expectations for Kymera Therapeutics higher, with our fair value estimate moving from US$114 to about US$116.76 as they factor in higher Street targets supported by growing optimism around KT-621 and upcoming clinical readouts.

Analyst Commentary

Recent Street research around Kymera Therapeutics shows a mix of optimism and caution, with most attention focused on KT-621 and its upcoming atopic dermatitis data, while one firm has stepped back from a previously more constructive stance.

Bullish Takeaways

Bullish analysts have raised price targets into the US$70 to US$81 range, suggesting they see room for upside if Kymera executes on its KT-621 clinical milestones.
Several reports highlight KT-621 in atopic dermatitis as a key potential value driver, with upcoming Phase 1b data in Q4 viewed as an important catalyst for reassessing Kymera's long term growth profile.
One bullish analyst outlines a risk adjusted sales view for KT-621 into the longer term, which feeds into higher valuation frameworks even at this early stage of development.
Following the Q3 update, bullish analysts point to management's reiterated confidence in KT-621 as support for staying constructive on execution and pipeline progress.

Bearish Takeaways

One bearish analyst has downgraded Kymera from a more positive rating to a neutral stance, signaling increased caution on risk reward at current levels.
The downgrade suggests some concern that expectations around KT-621 and the December data readout may already be reflected in the share price, which could limit upside if results are only in line with current views.
The presence of both raised targets and a downgrade indicates that Street conviction is not uniform, which can contribute to higher sensitivity of the stock to clinical and execution outcomes.

What's in the News

The U.S. FDA granted Fast Track designation to KT-621, Kymera's first in class oral STAT6 degrader for moderate to severe atopic dermatitis. This designation gives the program access to more frequent FDA interaction and potential use of accelerated pathways where criteria are met (Key Developments).
Kymera completed a US$602 million follow on equity offering of 7,000,000 common shares at US$86 per share, with a per share discount of US$4.42 (Key Developments).
The company reported positive results from the BroADen Phase 1b trial of KT-621 in atopic dermatitis, with 28 days of once daily dosing in 22 patients and a focus on safety, STAT6 degradation in blood and skin, biomarker changes and multiple clinical endpoints (Key Developments).
Kymera started dosing patients in BROADEN2, a randomized, double blind, placebo controlled Phase 2b trial of KT-621 in moderate to severe atopic dermatitis. The trial targets about 200 patients and has a primary endpoint of percent change in EASI score at Week 16, with data planned by mid 2027 (Key Developments).
The company presented new preclinical data for KT-579, an oral IRF5 degrader, showing disease modifying activity signals across lupus and rheumatoid arthritis models and reductions in several immunologic markers in spontaneous lupus mouse studies (Key Developments).

Valuation Changes

Fair Value: our estimate has risen slightly from US$114.00 to about US$116.76 per share.
Discount Rate: the rate used in the model has edged down from 7.06% to about 7.04%, implying a marginally lower required return in the updated assumptions.
Revenue Growth: the long term revenue growth assumption has shifted from a 4.42% decline to a 4.14% decline, indicating a slightly less conservative view on future top line trends.
Profit Margin: the projected net profit margin has moved modestly higher from 16.03% to about 16.24%.
Future P/E: the future P/E input remains very large, moving only slightly from about 2,010x to about 2,014x, which highlights the early stage nature of earnings expectations.

Advancing clinical programs and strategic partnerships could increase market share and positively impact future revenue and earnings.
Solid cash runway supports focused R&D investments, potentially boosting long-term growth without immediate financing pressures.
High R&D expenses and reliance on partnerships pose risks to Kymera's long-term financial health and ability to maintain a leadership position in their sector.

Catalysts

About Kymera Therapeutics

Together with its subsidiary, a clinical-stage biopharmaceutical company, focuses on discovering and developing small molecule therapeutics that selectively degrade disease-causing proteins by harnessing the body’s own natural protein degradation system.What are the underlying business or industry changes driving this perspective?

Kymera Therapeutics plans to advance its STAT6 and TYK2 programs into several clinical stages, which could potentially increase future revenue due to the expansion into new treatment markets and therapeutic areas.
The anticipated Phase II and III trials for their immunology pipeline aim to deliver biologics-like efficacy in oral form, which could enhance net margins by reducing manufacturing costs associated with biologics and potentially capturing a larger market share.
The collaboration with Sanofi on the IRAK4 program, with expanded Phase II trials, positions Kymera to fast-track toward pivotal trials, potentially accelerating time-to-market and impacting future earnings positively.
The company's strategy to introduce at least one new IND per year could expand their pipeline steadily, offering opportunities for revenue growth from licensing deals or partnerships.
With a significant cash runway extending into mid-2027, Kymera can support its R&D activities without immediate pressure for additional financing, allowing focused investment in high-potential programs that could drive long-term earnings growth.

Kymera Therapeutics Earnings and Revenue Growth

Kymera Therapeutics Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Kymera Therapeutics's revenue will grow by 20.4% annually over the next 3 years.
Analysts are not forecasting that Kymera Therapeutics will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Kymera Therapeutics's profit margin will increase from -475.6% to the average US Biotechs industry of 15.9% in 3 years.
If Kymera Therapeutics's profit margin were to converge on the industry average, you could expect earnings to reach $13.0 million (and earnings per share of $0.17) by about May 2028, up from $-223.9 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 410.7x on those 2028 earnings, up from -9.8x today. This future PE is greater than the current PE for the US Biotechs industry at 20.4x.
Analysts expect the number of shares outstanding to grow by 5.84% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.47%, as per the Simply Wall St company report.

Kymera Therapeutics Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The transition to a video format for financial updates may not significantly impact investor perception or the company’s market value, and does not directly address any operational or financial performance issues.
Competition in the STAT6 space has increased, which may impact Kymera's ability to maintain its leadership position and could affect future revenue streams.
Although significant progress is being made with partners like Sanofi, reliance on partnerships exposes Kymera to risks if partners face challenges in advancing clinical trials, potentially impacting future earnings.
The financial performance shows high R&D expenses with $71.8 million spent in the fourth quarter alone, which could strain resources and impact net margins if new drugs don't reach successful commercialization.
Despite a significant cash balance, the projected cash runway into mid-2027 suggests that sustained high operational costs could pose a risk to long-term financial health if projected clinical milestones or revenue targets are not met.

Valuation

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

The analysts have a consensus price target of $57.667 for Kymera Therapeutics 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 $97.0, and the most bearish reporting a price target of just $41.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $82.2 million, earnings will come to $13.0 million, and it would be trading on a PE ratio of 410.7x, assuming you use a discount rate of 6.5%.
Given the current share price of $33.69, the analyst price target of $57.67 is 41.6% 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.

KYMR: Advancing Clinical Milestones Will Drive Meaningful Upside in Immunology Indications