Zenas BioPharma (ZBIO): Evaluating Valuation After Promising Phase 2 Results for Obexelimab in Multiple Sclerosis

Zenas BioPharma (ZBIO) just shared promising Phase 2 MoonStone trial results for obexelimab in Relapsing Multiple Sclerosis. This news could influence how investors view the pipeline's potential in autoimmune treatments.

See our latest analysis for Zenas BioPharma.

The market was quick to react to Zenas BioPharma’s MoonStone trial update, sending the share price up 6.3% in a single day and building on a powerful run that saw a 55.7% share price return over the past month. While the stock has skyrocketed 260% year-to-date, it is worth noting that the one-year total shareholder return is a solid 55%, which suggests that momentum has accelerated in recent months.

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With shares up sharply and plenty of optimism around the pipeline, investors are left wondering if Zenas BioPharma is still undervalued, or if the market is already reflecting all the anticipated growth from this point forward.

Price-to-Book Ratio of 7.3x: Is it justified?

With Zenas BioPharma currently trading at a price-to-book ratio of 7.3x, the stock sits well above both the US Biotechs industry average of 2.4x and the peer average of 3.7x. The last close price was $32.46, which puts a spotlight on whether the premium is warranted.

The price-to-book (PB) ratio reflects the relationship between a company's market value and its net asset value. For biotechs, investors sometimes tolerate high PB ratios because assets like intellectual property and clinical pipelines can be undervalued on the books. This can make a higher multiple excusable during rapid growth or major trial milestones.

However, Zenas BioPharma's PB multiple is more than triple the sector median and nearly double its closest peers. This signals that the market has high hopes for future breakthroughs, but it also sets a bar for execution that leaves less margin for disappointment. Based on the available data, there is no fair ratio established to suggest whether this higher valuation could remain justified if sector sentiment shifts.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book Ratio of 7.3x (OVERVALUED)

However, clinical setbacks or slower revenue growth than expected could quickly challenge the current optimism and impact Zenas BioPharma's high valuation.

Find out about the key risks to this Zenas BioPharma narrative.

Build Your Own Zenas BioPharma Narrative

If you see things differently or want to dig deeper into the numbers, you can piece together your own story in just a few minutes. Do it your way

A great starting point for your Zenas BioPharma research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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