Zymeworks (NYSE: ZYME) came into focus in late December when major shareholder EcoR1 Capital increased its stake. Already a 10% holder and board member, EcoR1 made several purchases in December and the first days of 2025, bringing its holding to over 15 million shares. This is a significant increase and affirmation of the outlook, including numerous catalysts in 2025. Among them are the recent approval of its flagship oncology treatment, the expectation for additional approvals, and the advancement of a robust and promising pipeline. What is Zymeworks? It is a clinical-stage biopharma working on novel treatments for hard-to-treat cancers and other diseases.
Actual insiders, the company’s executives, own a small fraction of the company, but a robust sell-side ownership offsets that. Institutions, including large shareholders like EcoR1 Capital, own more than 90% of the shares and aren’t selling. Regarding EcoR1, it is a boutique investment firm focused on novel therapies across a wide range of diseases.
The analysts also support this stock, with coverage, sentiment, and the price target rising. The coverage more than doubled in 2024, pushing sentiment to a high Moderate Buy and the price target above $19. The $19 target implied a 35% upside at the end of the year, and revisions suggest higher price points are likely. The freshest targets were released late in the year as the news cycle improved and pointed to the mid-$20 range. Naysayers include firms like Wells Fargo, which thinks the stock has already priced in 2025’s catalysts and sees it moving lower.
Zymeworks' Lead Treatment Gets Initial Approval
The primary catalyst for Zymeworks' stock price is Ziihera's approval. The FDA granted a fast-track, limited approval for biliary tract cancer patients with limited or no alternatives. The approval is in effect and expected to lead to follow-on approvals for additional treatments and use in other countries. Zanidatamab, the compound in Ziihera, is currently in 10 phase III trials for further approval in the U.S. and globally.
However, the critical details are expected milestone payments. The milestones are due upon FDA approval and are worth over $500 million to the company when received. The money is critical to advancing the pipeline and would provide sufficient capital to sustain operations into the second half of 2027. Otherwise, the company may be forced to raise capital in other ways, diluting shareholder value.
While well capitalized, the outlook for revenue and earnings will be a headwind for this market. The analysts forecast sluggish revenue over the next four to six quarters, consisting entirely of milestone payments earned as it progresses the pipeline. Pipeline activity in 2025 includes expected phase III results for Ziihera as a front-line treatment, a significant catalyst for higher share prices if positive. Other catalysts include the submission of new candidate approvals and the expected expansion of its pipeline.
Short-Sellers May Cap Gain in Zymeworks Stock
The short interest in Zymeworks wasn’t prohibitive in early January but sufficiently high to cause worry. At 6%, the figure is rising along with the stock price and may cap gains this year. The price action in early January shows signs of resistance at a critical level, so there is cause for concern. The critical level is near $16.50, aligning with market consolidations in 2019 and 2022 that provide targets for strong resistance. Failing to move above $16.50 will leave the market range bound and likely to head lower by the year’s end.
The critical support is near a cluster of moving averages that include the short-term 30-day EMA, the longer-term 150-day EMA, and the ultra-long-term two-year EMA, which show a Golden Crossover. A Golden Crossover indicates shifting market sentiment, often leading to higher share share prices.
