Can Zaynich do for Wockhardt what Ozempic did for Novo Nordisk?
Wockhardt's Zaynich antibiotic surged stock by 75%. CEO Habil Khorakiwala cited its uniqueness; phase three trials end this fiscal year. Compared to Novo Nordisk's Ozempic, Zaynich’s $25 billion potential counters global antibiotic resistance.
Promising trials of a new trademarked as - meant to act against all major - has triggered a sharp run-up in the stock. It has jumped nearly 75% in less than a month as the Street steadily factored in the immense opportunity that could open for the drug once launched globally.This is akin to the opportunity which diabetes drug provided to its innovator on being the wonder drug for weight loss. The success of Ozempic has made the Danish drug maker the most valuable company in Europe.
Wockhardt's founder chairman Habil Khorakiwala in his AGM speech has informed that the Zaynich drug is a proprietary new chemical entity and one-of-its-kind antibiotics discovered in the last 50 years. It is currently undergoing global phase three which are expected to be complete by this fiscal.
The company expects to receive global approval for launching Zaynich in FY26. The results from the recent trials of administering the drug on compassionate grounds (in India as well as in the US) reinforce the bullish sentiment towards the drug's success.
Zaynich has a market potential of $25 billion stemming from the high antibiotic resistance of the global population. This is huge for a company that earned revenues of ₹2,798 crore and posted a loss of ₹472 crore for FY24 and is currently trading at a market cap of around ₹14,000 crore.
The promise of a successful drug discovery by an Indian pharma company has led marquee investors such as Madhusudan Kela and Prashant Jain to invest in Wockhardt's QIP issue of ₹480 crore earlier in March. The company raised the QIP to pare its debt and fund the clinical trials of its antibiotic drugs pipeline.
To be sure, this is uncharted territory for Indian pharma investors as no Indian company has yet delivered a resounding success in innovative drug discovery. A case in point is that of that monetised its R&D in a limited way during the last decade.
While the stock is still 50% lower than the record high of ₹1,996 hit in December 2013, it has more than tripled in the past one year. The positive news related to the company's R&D efforts have been factored into the stock price. Zaynich may well have the potential to be for Wockhardt what Ozempic turned out to be for the Novo Nordisk stock, but the moot question is how much to pre-empt the drug's success during the final trial phase.
Investors, while being bullish about the company's prospects, may well be cautious of the execution risk premium building up in the current stock price.
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Source: Stocks-Markets-Economic Times
