Zydus Lifesciences upgraded to 'Buy' at Systematix; check target here

Systematix said the recent US FDA approval of Zycubo, a Menkes disease treatment marketed by Sentynl Therapeutics, significantly enhances the company's growth outlook

Systematix Institutional Equities has upgraded Zydus Lifesciences stock to 'Buy', citing the addition of a new ultra-rare disease drug and improved earnings visibility from its US specialty business.

 

The brokerage said the recent US Food and Drug Administration (US FDA) approval of Zycubo, a Menkes disease treatment marketed by Sentynl Therapeutics, significantly enhances the company’s growth outlook. 

 

Zycubo, in-licensed from Cyprium Therapeutics, is the first and only approved treatment for Menkes disease, an ultra-rare condition diagnosed in newborns, with around 56 cases expected annually in the United States (US). Untreated, the disease has a median survival of less than 18 months.

 

 

Systematix said clinical data show that early treatment with Zycubo can substantially improve survival outcomes, extending survival to nearly 177 months when initiated within 10 days of birth, compared with about 62 months when treatment is started later. The approval expands Sentynl’s addressable patient base nearly fivefold.  ALSO READ | Havells India slips 3% after Q3 profit miss estimates; brokerages divided 

Assuming a net annual price realisation of about $600,000 per patient and a 50 per cent treatment uptake among eligible patients, Systematix estimates peak sales potential of around $50 million for Zycubo. Zydus Lifesciences will pay tiered royalties on net commercial sales, along with milestone payments linked to sales and regulatory approvals.

 

The brokerage has revised its estimates to factor in Zycubo and also included contributions from Zydus’ licensing agreement with Bioeq for the commercialisation of a Lucentis biosimilar in the US. Its revised target price is ₹1,038, based on 25 times financial year 2027 earnings per share (FY27 EPS).

 

Systematix added that with Zycubo added to the portfolio, Sentynl could turn profitable by FY28. The US subsidiary reported annual sales of $23 million in financial year 2025, but posted an Ebitda loss of $8 million and an operating loss of $16 million during the year.

 

"This milestone marks a transformative moment for the Zydus Group and for families affected by Menkes disease," Sharvil P. Patel, managing director, Zydus Lifesciences, had said in a statement earlier. "For the first time, patients have access to an approved therapy, offering hope where no options existed."  ALSO READ | Nifty PSU Bank index hits new high, rallies 21% since October on FPI buying

Zydus Lifesciences Q2 recap

Zydus Lifesciences has posted a 17 per cent year-on-year (Y-o-Y) rise in revenue from operations to ₹6,123 crore, while net profit rose 38 per cent to ₹1,258.6 crore. 

 

Research and development (R&D) investments for the quarter stood at ₹482 crore, or 7.9 per cent of revenues. Earnings before interest, tax, depreciation, and amortisation (Ebitda) for the quarter rose 38 per cent Y-o-Y to ₹2,015.8 crore, with a resulting EBITDA margin of 32.9 per cent—an improvement of 500 basis points from a year earlier. 

 

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