February 16, 2007

Zymogenetics- $24 Price Target

From Zack's:

Zymogenetics (ZGEN) shares are attractively priced and poised to outperform in the second half of 2007. Why is Nadine Wong bullish? Zymogenetics filed a BLA for rhThrombin in December 2006 and an FDA approval is expected with market launch occurring in the fourth quarter of 2007. rhThrombin will be an attractive alternative to currently marketed plasma-derived products and will quickly become a major player in the thrombin surgical hemostasis market. The key benefit of rhThrombin over bovine thrombin is the vastly superior immunogenicity profile (22% vs. 1.5%) and likely lack of a black box warning label. As a result, rhThrombin will rapidly convert and ultimately grow the current $250 million bovine thrombin market. Key advantages of the human plasma product include consistent manufacturing capacity, no risk of blood-borne pathogens, longer shelf life and more convenient use in the surgical suite. Wong and her team think rhThrombin will be the dominant thrombin product with potential sales of $308 million in 2010.

However, it is likely the primary competitor will be Omrix's OMRI, a pooled human plasma thrombin, which will be marketed by J&J Ethicon. It’s likely Omrix’s drug may get approval ahead of Zymogenetics’ this year, pressuring Zymogenetics’ shares. Target price is $24.

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