In a very upbeat and promising report, Hazlett explains why he is initiating coverage on ZSAN with a Buy rating: "We believe M&A potential exists with Zosano [...] Since Zosano is effectively a one product company with a modest infrastructure, there is a reasonable chance that a larger industry suitor could emerge and take over the company’s operations. The timing of such events is always a challenge, though with the awareness building of M207’s robust pivotal efficacy data and differentiated delivery profile compared to other very highly efficacious migraine therapeutics, and progress on the long-term safety study, we believe M&A is a very real possibility at any time, but at the very least closer to an NDA approval, in our view."
The analyst continued, "We assess the total value of M207 at $16.21 per ZSAN share, assuming Zosano continues to operate independently. Collectively, we assess the total value of its programs and other assets, at $17.14 per ZSAN share." Net net, "We believe M207 can have a substantial role in difficult-to-treat well-established migraine, and in those where nausea is a material concern. Zosano has now fully enrolled M207’s long term safety study, its only remaining clinical work. NDA filing of M207 is expected in 2H19, and FDA approval in 2020; we estimate its peak revenue in excess of $300mm."
In reaction, Zosano shares are up nearly 11% to $4.22 in pre-market trading Thursday.