Shares of Kodiak Sciences KOD rallied 29.6% on Monday after an eminent financial services company, Jefferies, upgraded KOD to a “BUY” rating stating that the company has a major “turnaround story” in place for 2025. Kodiak has lately been garnering immense investor attention driven by the significant potential of its ongoing late-stage studies on the lead candidate, tarcocimab, for retinal disease indications and other pipeline programs.
Tarcocimab, a novel anti-VEGF antibody biopolymer conjugate, is being developed for diabetic eye disease and wet age-related macular degeneration (wet AMD).
In its report, Jefferies stated that at $7 per share ($400 million market cap), the stock price is greatly undervalued and set a target price of $20, translating to a market cap of more than $1 billion in 2025, ahead of phase III data readouts. By 2026, Jefferies projects the stock price to approach $30-$50 or $1.5-$3 billion in market cap.
Let us dig deeper into the catalysts behind Jefferies’ optimism regarding the growth of Kodiak Sciences in the near future.
KOD’s Lead Program Exhibits Significant Potential
In late 2023, Kodiak rebooted the development program of tarcocimab following positive phase III results from the GLOW study, which evaluated the treatment in patients with moderately severe to severe non-proliferative diabetic retinopathy (NPDR).
The company had previously reported the success of its phase III DAYLIGHT and BEACON studies evaluating tarcocimab in patients with wet AMD and retinal vein occlusion (RVO), respectively.The positive data readouts from DAYLIGHT, BEACON and GLOW studies give the company three successful phase III pivotal studies with the candidate across three different retinal vascular and exudative diseases, such as wet AMD, RVO and NPDR.
Leveraging the GLOW1 study's success, Kodiak initiated the GLOW2 study in late 2023 to further investigate tarcocimab for diabetic retinopathy and began dosing patients in May 2024, with enrollment expected to be completed soon. The success of the GLOW2 study is expected to serve as the basis for a single biologics license application submission for tarcocimab, seeking its approval.
The revival of tarcocimab in Kodiak's pipeline, after a major setback earlier in 2023, has restored stakeholder confidence in the candidate’s potential for treating retinal diseases.
In the past three months, shares of KOD have skyrocketed 310.9% against the industry’s 6.3% decline.
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KOD’s Other Pipeline Programs Progressing Well
Kodiak is also developing KSI-501, a dual inhibitor bioconjugate molecule, to address inflammation and abnormal blood vessel growth in retinal vascular diseases.
Following the successful phase I study, Kodiak is preparing to advance KSI-501 into phase III through the DAYBREAK study, which will assess its efficacy, durability and safety for wet AMD. The company also plans to study tarcocimab as a second investigational arm in the DAYBREAK study for wet AMD, with KSI-501 being the first investigational arm. The study is designed to be a non-inferiority study evaluating KSI-501 dosed every four to 24 weeks compared with Regeneron’s Eylea dosed per label. The phase III DAYBREAK study on tarcocimab and KSI-501 is currently enrolling patients. By initiating a second phase III study, Kodiak is positioning itself with two late-stage candidates, providing a potential fallback if one program encounters challenges.
Additionally, Kodiak is developing the unconjugated protein component of KSI-501, known as KSI-101 (formerly known as KSI-501P), for patients with diabetic macular edema (DME) and macular edema secondary to inflammation (MESI). It is a novel, potent and high-strength bispecific protein targeting IL-6 and VEGF. At present, there are no available intravitreal biologic therapies addressing the spectrum of inflammatory conditions of the retina, which represents a huge new market opportunity separate from the established anti-VEGF market.
Kodiak is enrolling patients in the phase Ib APEX study, evaluating KSI-101 in two new cohorts — cohort 1 in patients with DME and cohort 2 in patients with MESI. The APEX study will evaluate the safety and tolerability, and identify two dose levels of KSI-101 to progress into late-stage development. The pivotal phase IIb/III studies (PEAK and PINNACLE) will investigate KSI-101 in MESI.
KOD Gains Potential Investor Interest
Per the Jefferies article, Kodiak is gaining significant interest from healthcare funds given its current attractive valuation. KOD has also hinted that it might seek financing in 2025, providing it with an influx of cash and making it eligible to draw more funds from imminent healthcare investors to support operations.
Kodiak ended the third quarter with cash, cash equivalents and marketable securities worth $197.9 million compared with $219.2 million as of June 30, 2024. The company believes that its current cash balance is enough to support its present and planned operations into 2026.
Kodiak Sciences Inc. Price and Consensus
Kodiak Sciences Inc. Price and Consensus
Kodiak Sciences Inc. price-consensus-chart | Kodiak Sciences Inc. Quote
KOD’s Zacks Rank & Stocks to Consider
KOD currently carries a Zacks Rank #3 (Hold).
Some better-ranked pharma stocks are Halozyme Therapeutics HALO, Pfizer PFE and Gilead Sciences GILD, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past 60 days, Halozyme Therapeutics’ earnings estimates have increased from $3.95 to $4.05 per share for 2024, while that for 2025 has narrowed from $4.73 to $4.80. HALO shares have lost 17.4% in the past three months.
Halozyme Therapeutics’ earnings beat estimates in three of the trailing four quarters and matched once, delivering an average surprise of 14.86%.
In the past 60 days, Pfizer’s earnings estimates have risen from $2.62 to $2.91 per share for 2024, while that for 2025 has increased from $2.84 to $2.91. PFE shares have lost 12% in the past three months.
Pfizer’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 74.50%.
In the past 60 days, Gilead Sciences’ earnings estimates have risen from $3.79 to $4.32 per share for 2024, while that for 2025 has increased from $7.24 to $7.38. GILD shares have risen 11.9% in the past three months.
Gilead Sciences’ earnings beat estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 15.46%.
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