Jazz Pharmaceuticals' New Cancer Drug Drives $1.3 Billion Opportunity, Says Analyst

Jazz Pharmaceuticals PLC's (NASDAQ:JAZZ) revenue growth and stock valuation is being driven by the adoption of Ziihera as a first-line (1L) treatment of HER2-positive (HER2+) metastatic gastroesophageal adenocarcinoma (GEA), according to BofA Securities.

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The Jazz Pharmaceuticals Analyst: Analyst Jason Gerberry maintained a Buy rating, while raising the price target from $281 to $307.

The Jazz Pharmaceuticals Thesis: A survey of 15 oncologists indicated faster-than-expected adoption of Ziihera, Gerberry said in the note.

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He added the following takeaways from the survey:

• Ziihera could secure U.S. approval in GEA on or before Aug. 25 PDUFA (Prescription Drug User Fee Act is the deadline by which the FDA decides whether to approve a new drug application.)
• 80% of respondents were already highly familiar with the Phase III results
• Respondents ranked Ziihera's efficacy at 4.1 (on a scale of 1-5, with 5 being the best score)
• Ziihera is positioned to be the number one-prescribed regimen in 1L HER2+ GEA
• Ziihera could gain around 34% share by the sixth month and 43% by the first year
• Patients with low PD-L1 protein, which is estimated to be 44% of the population, could represent a "low-hanging fruit" market opportunity for Ziihera

The analyst estimates peak Ziihera GEA sales at around $1.3 billion, 30% higher than prior forecasts, given the strong Phase III data, the survey suggested higher-than-anticipated penetration, and breast cancer offering further upside potential.

"The market opportunity and brisk adoption suggest a favorable launch ramp & longer-term follow-up data could drive peak sales upside," Gerberry wrote.

With Ziihera driving "a step-change in revenue growth," Jazz Pharmaceuticals could generate high-single-digit revenue CAGR between 2027 and 2032, he further stated.

The stock remains inexpensive versus peers despite its strong year-to-date performance, the analyst added.

JAZZ Price Action: Shares of Jazz Pharmaceuticals had risen by 0.27% to $229.80 at the time of publication on Wednesday.