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Brokerage Upgrade Signals New Growth Phase
Systematix Institutional Equities initiated coverage on Zydus Lifesciences with a 'Buy' rating, setting a target price of ₹1,038. The upgrade is underpinned by enhanced earnings visibility from its United States specialty segment and the recent US Food and Drug Administration (US FDA) approval of Zycubo. This approval marks a significant milestone for the company and patients alike.
Zycubo: A Lifeline for Ultra-Rare Disease
Zycubo, licensed from Cyprium Therapeutics and marketed by Zydus's US subsidiary Sentynl Therapeutics, is the first and only approved therapy for Menkes disease. This ultra-rare inherited disorder affects newborns, with approximately 56 expected cases annually in the U.S. Left untreated, median survival is under 18 months. Clinical data demonstrate that early Zycubo treatment, initiated within 10 days of birth, can extend survival to nearly 177 months, a dramatic improvement over later interventions.
Market Potential and Sentynl's Outlook
Systematix estimates peak sales for Zycubo could reach around $50 million, assuming a net annual price realization of $600,000 per patient and a 50% treatment uptake. Zydus Lifesciences will benefit from tiered royalties and milestone payments. The brokerage also factored in contributions from Zydus's licensing deal with Bioeq for a Lucentis biosimilar in the U.S. This portfolio expansion is expected to move Sentynl Therapeutics toward profitability by FY28, a notable shift from its FY25 reported losses.
Robust Quarterly Performance
Zydus Lifesciences recently reported strong financial results for its second quarter. Revenue from operations climbed 17% year-on-year to ₹6,123 crore, while net profit surged 38% to ₹1,258.6 crore. Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) also saw a 38% year-on-year increase to ₹2,015.8 crore, with EBITDA margins improving by 500 basis points to 32.9%. Research and development investments stood at ₹482 crore, representing 7.9% of revenues.