Eli Lilly Has Trimmed Its Stake in Biopharma Firm Zymeworks

Eli Lilly (LLY) sold half-a-million dollars in shares of Zymeworks (ZYME) over the month of August.

From Aug. 2 through 31, Lilly sold 36,931 shares of the Vancouver-based biopharmaceutical firm for a total of $507,759, or $13.75 per share on average — 75 cents above Zymeworks’ May 2017 initial-public-offering price. Lilly now owns 3.92 million Zymeworks shares, a stake of about 14.6% based on an average 26.9 million shares outstanding at June 30.

Lilly was an early investor, and immediately after Zymeworks went public the pharma giant was its largest shareholder with a stake of 3.96 million shares, nearly 16% of shares outstanding. A June 2018 public offering of 6.2 million shares — priced at $15.75 each — has increased the share count.

Lilly and Zymeworks both declined to comment.

Lilly’s transactions come at a time when the shares are on fire. They are off highs from June, but still sport year-to-date gains of 78% through midday trading Wednesday, a turnaround from 2017 when they ended the year with a 42% collapse from the IPO price.

On Tuesday, Zymeworks announced it will receive a $2 million milestone payment from Lilly under an earlier pact for a submission by the latter of an Investigational New Drug (IND) application “for a bispecific antibody enabled by Zymeworks’ proprietary Azymetric platform.”

Analysts are upbeat on Zymeworks, and the milestone payment has reinforced their optimism.

Arlinda Lee of Canaccord Genuity reiterated a Buy rating and $21 price target on Zymeworks on Wednesday. “[W]e expected Zymeworks’ collaborations to start bearing fruit with IND milestones starting in 2018,” she wrote in a report.

Raymond JamesDavid Novak maintained an Outperform rating and $27 price target on Wednesday. “Based on disclosure from Lilly’s second-quarter earnings presentation, we believe the current bispecific is likely to be a tumor-agnostic immuno-oncology asset, similar to Merck’s (MRK) Keytruda (2017 sales of $3.8 billion),” Novak wrote in a report.

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