Presbyopia Eye Drop Adoption Will Drive Strong Long Term Upside Potential

Catalysts

About LENZ Therapeutics

LENZ Therapeutics develops and commercializes innovative ophthalmic therapies, led by VIZZ, a novel eye drop for presbyopia.

What are the underlying business or industry changes driving this perspective?

• Rapid early adoption of VIZZ as a differentiated, first and only aceclidine-based presbyopia therapy, with thousands of prescribing eye care professionals and strong repeat prescribing behavior, positions LENZ for accelerating prescription growth and expanding revenue.
• Exceptionally high awareness and enthusiasm among eye care professionals, supported by intensive sampling, KOL programs and real-world efficacy feedback, should drive sustained increases in new prescribers and higher utilization per practice, supporting durable top line expansion and improving sales productivity.
• Planned large-scale, digitally focused direct-to-consumer promotion anchored by a high-profile spokesperson is expected to unlock a vast, underpenetrated presbyopia population, significantly increasing patient demand, driving volume leverage and enhancing earnings power as marketing spend scales more slowly than revenue.
• Capital-efficient ex U.S. licensing deals, milestone payments and double-digit royalty streams in major international markets provide incremental, high-margin revenue layers that can enhance overall net margins as global demand for non-surgical presbyopia correction grows.
• Strong balance sheet with over $300 million in cash, disciplined SG&A and declining R&D spend gives LENZ the runway to fund the full commercialization curve of VIZZ without near-term dilution. This in turn enables operating leverage to progressively narrow net losses and move toward positive earnings as revenue builds.

Assumptions

This narrative explores a more optimistic perspective on LENZ Therapeutics compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming LENZ Therapeutics's revenue will grow by 129.7% annually over the next 3 years.
• The bullish analysts are not forecasting that LENZ Therapeutics will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate LENZ Therapeutics's profit margin will increase from -336.5% to the average US Pharmaceuticals industry of 20.9% in 3 years.
• If LENZ Therapeutics's profit margin were to converge on the industry average, you could expect earnings to reach $44.3 million (and earnings per share of $1.16) by about December 2028, up from $-58.9 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 65.7x on those 2028 earnings, up from -9.4x today. This future PE is greater than the current PE for the US Pharmaceuticals industry at 19.8x.
• The bullish 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 6.96%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• If real world side effects such as transient stinging and redness prove more frequent, more intense or less Tachyphylactic than management currently believes, eye care professionals could be more cautious in recommending chronic use of VIZZ. This could constrain long term prescription volumes and revenue growth.
• The heavy use of free sampling and a Category of 1 positioning alongside an expensive, celebrity fronted direct to consumer campaign may not translate into sustained paid script conversion or repeat use. This would pressure long term revenue scalability and delay the path to positive operating cash flow and earnings.
• Secular shifts in presbyopia management, including patient inertia toward relatively inexpensive existing solutions such as readers and contact lenses and potential competitive pharmacologic entries, could limit VIZZ penetration despite high disease prevalence. This could cap addressable market share and slow top line expansion.
• LENZ is entering its first years as a commercial stage company with operating expenses already ramping sharply and SG&A guided to remain high in 2026. If revenue lags expectations or ex U.S. milestones and royalties are delayed, high fixed commercial spend could keep net margins deeply negative and extend the period of net losses.
• The long term thesis assumes broad, durable adoption by eye care professionals and payers across both retail and e pharmacy channels. However, if retail pharmacy uptake, reimbursement dynamics or logistics create persistent friction for patients, refill behavior and adherence could suffer, undermining recurring revenue and limiting operating leverage on earnings.

Valuation

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

• The assumed bullish price target for LENZ Therapeutics is $62.0, which represents up to two standard deviations above the consensus price target of $53.71. This valuation is based on what can be assumed as the expectations of LENZ Therapeutics's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $62.0, and the most bearish reporting a price target of just $36.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $212.2 million, earnings will come to $44.3 million, and it would be trading on a PE ratio of 65.7x, assuming you use a discount rate of 7.0%.
  
• Given the current share price of $17.62, the analyst price target of $62.0 is 71.6% 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.