Addition to WinInStocks portfolio: ZGNX stock analysis, predictions, analyst ratings

Updated: Jan 22

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Another stock that was brought up to my attention by one of WinInStock subscribers and supporters: ZGNX (Zogenix). Thank you for this recommendation.

ZGNX stock looks like an overlooked gem stock that is well covered by analysts that predict the price will triple.

Zogenix, Inc., a pharmaceutical company, develops and commercializes transformative therapies to enhance the lives of patients and their families living with rare diseases in the United States. The company’s lead product candidate is the Fintepla, a low-dose fenfluramine, which is in Phase III clinical trials for the treatment of seizures associated with Dravet syndrome and Lennox-Gastaut syndrome (LGS); and which is in Phase II clinical trials for the treatment of other rare epileptic syndromes and diseases. It also developing MT1621, an investigational deoxynucleoside substrate enhancement therapy for the treatment of inherited mitochondrial DNA depletion disorder thymidine kinase 2 deficiency (TK2d). Zogenix, Inc. has collaboration with Tevard Biosciences to advance novel gene therapies for Dravet Syndrome and other genetic epilepsies.

There are 12 analysts covering ZGNX stock. 9 of them have a "BUY" rating, 3 have a "Hold." The average price for this stock is $46 representing 150% upside potential from its current price of $18.26. Moreover, the range of price predictions goes from $25 to as high as $69!


Similar information can be found here if you are wondering about the recency of those ratings. Nasdaq says there were 7 ratings in the past 3 months and all of them are Strong Buy:


Analysts are expecting that Zogenix will start growing its sales very quickly in the next 2 years which will take the company to profit in early 2023.

With growing earnings, analysts are expecting that ZGNX will reach $3.16 in EPS and revenue of $469 million by the end of 2025. If we take our usual PE of 20 this would mean our target price for that year is ~$63.


Looking at the price chart for ZGNX stock it has not been doing great, heading for the 3rd bottom at $17. This reduces the risk of buying into this stock as you could set your stop loss below $17. A good risk-reward play.

Obviously, you are wondering why there is such a disconnect between the price action and estimates and predictions for ZGNX stock.

Indeed, the company has not been generating much revenue over the past few years.

However, on December 21st it announced:

The European Commission Approves Zogenix’s FINTEPLA® (Fenfluramine) Oral Solution for the Treatment of Seizures in Dravet Syndrome


Earlier (June 25th, 2020) Fintepla was approved by FDA

In addition, Zogenix has a few treatments in the pipeline for approval in different regions of the world:


The key risk for Zogenix is that it targets rare diseases. For example, Fintepla was so far approved for the treatment of Dravet syndrome in the USA and Europe.

However, investor presentation states that Dravet syndrome affects 1/15,700 live births in the U.S. (about 200-250 infants/year) and approximately one in 20,000 to 40,000 live births in Europe

However, Dravet syndrome is lifespan. So, we might be looking at ~11,000 people with this syndrome in the USA (200 per year times 50 years lifespan). Lifespan for people with Dravet syndrome is reduced. Likely there would be as many people with this syndrome in Europe. So, times 2 gives 22,000 people.

However, Fintepla's average cost is estimated at $96,000 per year, according to Farr, who says that the price is “really based upon the fact that this has shown absolutely profound efficacy in Dravet syndrome.”


This price is obviously not something that families could afford with no support from the government. It is hard to estimate, but let's say only 2,000 people can get this drug with or without government support. This would give us a revenue of $192 million per year.

As you can see there are some assumptions that I took along the way, and that is the main risk.

On a positive note, Zogenix is also waiting for Fintepla's approval for the treatment of Lennox-Gastaut Syndrome which impacts 60,000-100,000 living with LGS in the U.S. and Europe combined. As the drug was already approved for one syndrome it means there are no problems with its safety, so the question pertains only to its efficacy.

In summary, the recent price action is quite puzzling. There might be some hidden problems I am not seeing. Buy with care.

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