This Biotech Stock Has Surged Over 100% in 2018: Is it Still a Buy Today?

Zymeworks Inc. (TSX:ZYME)(NYSE:ZYME) stock has soared in 2018, as the company has generated excitement in early trials for its lead product candidate.

| More on:
The Motley Fool

Biotechnology has received renewed interest, as investors look for alternative growth opportunities with cannabis and other markets flailing so far in 2018.

Zymeworks Inc. (TSX:ZYME)(NYSE:ZYME) is a clinical-stage biopharmaceutical company focused on the treatment of breast cancer. Shares of Zymeworks have soared 116.8% in 2018 as of close on April 30. The stock has recovered nicely from a steep drop in late May of 2017 and is now up 12.8% year over year. Zymeworks surged on news that Celgene Corporation had exercised its right to expand its collaboration agreements for the “research, development, and commercialization of biospecific antibody therapeutics using Zymeworks’ Azymetric platform.”

Zymeworks is engaged in phase one clinical trials for ZW25, its lead product candidate. ZW25 is an antibody designed to target gastric, ovarian, and breast cancer tumours. The product has yielded impressive results so far. Recently, the company announced that ZW25 had been selected for an oral presentation at the American Society of Clinical Oncology, which will be held in Chicago in early June.

Biotechnology stocks have been an explosive source of growth in recent years, but investors must also exercise a reasonable degree of caution with these speculative investments. The revenue garnered from established breast cancer drugs in the United States has generated a great deal of excitement over the prospects for Zymeworks.

Just how explosive is the growth of this industry?

The global breast cancer market has been fueled by rising healthcare expenditures, increased rates of obesity and diabetes in the population, and aging female demographics. In 2017, a report hosted by Research and Markets projected that the global breast cancer treatment market would reach $18.8 billion by 2025. This would represent a compound annual growth rate (CAGR) of 7.6% from 2017 to 2025.

Another report hosted by Global Market Insights projected that the breast cancer therapeutics market would reach $28 billion by 2024, representing a CAGR of 9%. This report cited the rising prevalence of breast cancer as well as the advancement of diagnostic and screening programs worldwide and sizable reimbursement policies. Whatever the case, the explosive potential of this market is clear. Does that mean you should invest in Zymeworks today?

Zymeworks released its 2017 fourth-quarter and full-year results on March 14. Highlights from 2017 included the results from ongoing phase 1 trials for ZW25, which we have covered already. In response to the successes, Zymeworks has expanded testing sites in the United States and Canada. Going forward, president and CEO Ali Tehrnani said that Zymeworks plans to complete enrollments in its phase one study in 2018 as well as file an Investigational New Drug application for ZW49, its second clinical compound.

In 2017, the company reported revenue of $51.8 million compared to $11 million in 2016. This was powered by the collection of a $50 million fee from its corporate partnership with Janssen. Zymeworks’s net loss in 2017 fell to $10.4 million compared to a $33.8 million loss in 2016. At the end of fiscal 2017, Zymeworks also reported it had $87.8 million in cash and cash equivalents.

The initial results for ZW25 have been promising, and further progress will undoubtedly generate excitement considering the enormous amount of revenue potential carried by breakouts in this industry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Tech Stocks

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

4 Reasons to Buy Kinaxis Stock Like There’s No Tomorrow

Kinaxis stock has a strong past. But there is even more to look forward to from this top tech stock.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

The Future of AI: Best Canadian Stocks to Buy Now

Here are two of the best AI-focused stocks in Canada that you can consider adding to your portfolio before it’s…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 TFSA Stocks to Buy Right Now With $7,000

Are you looking for growth stocks that can help you maximize the tax-free withdrawals of the TFSA? This article is…

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $1,000

Not all tech stocks are the risky investments that many think they are. Which is why we're focusing on the…

Read more »