Morgan Stanley on Zai Lab (ZLAB) Post BMY (BMY) Approval: 'We believe it should bode moderately positively for ZLAB shares'

Morgan Stanley analyst Jack Lin reiterated an Overweight rating and $50.00 price target on Zai Lab (NASDAQ: ZLAB).

The analyst comments "The news: Bristol Myers Squibb (BMY.N, covered by Terence Flynn) has announced the approval of xanomeline/trospium chloride ("KarXT") by the US FDA, branded COBENFY™, for the treatment of schizophrenia in adults. The clean label did not carry a class block-box warning, warnings for tardive dyskinesia, or extensive cardiovascular risk monitoring requirements, which were among the potential downside label risks highlighted by our US biopharma team in their PDUFA preview. Recall that Zai Lab originally in-licensed Greater China rights to the asset from Karuna for US$187mn, prior to the latter's US$14bn acquisition by BMY last year. Our thoughts: While an approval for partner BMY was generally expected, we expect the clean label and a premium in wholesale acquisition cost (WAC) – see report – to support our above-consensus 2030e risk-adjusted revenue forecast of US$600mn for KarXT (vs. Visible Alpha consensus of US$441mn). We believe it should bode moderately positively for ZLAB shares."

For an analyst ratings summary and ratings history on Zai Lab click here. For more ratings news on Zai Lab click here.

Shares of Zai Lab closed at $22.60 yesterday.

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