Kodiak Sciences (KOD) Reports Phase 3 Wins, Is The DAYBREAK Upside Already Priced In?

Kodiak Sciences (KOD) is back in focus after reporting that two lead retinal drug candidates, Zenkuda and tabirafusp-ted, met primary Phase 3 endpoints in the DAYBREAK wet age-related macular degeneration trial.

The DAYBREAK results landed after a sharp re-rating in Kodiak Sciences, with the share price at US$91.12 and a 7-day share price return of 169.59% on top of a 250.19% year-to-date move. The 1-year total shareholder return of 456.63% and very large 3-year total shareholder return signal powerful but volatile momentum that contrasts with a slightly negative 5-year total shareholder return.

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After a move this violent in Kodiak Sciences, the real tension shifts to price. Do current expectations already reflect the DAYBREAK upside, or does the recent surge still leave room on the risk reward scales for new buyers?

Most Popular Narrative: 7% Overvalued

Kodiak Sciences closed at $91.12, a little above the most followed fair value estimate of $85 based on a discounted cash flow narrative that uses a 7.5% discount rate and assumes premium pricing on a late stage retina franchise.

The Phase 3 DAYBREAK wet AMD data showing Zenkuda meeting primary endpoints with planned multi indication filing and a majority of patients on extended 24 week dosing intervals creates room for pricing and regimen mix that could lift average revenue per patient and support higher long term gross margins.

See why 0 investors see Kodiak Sciences as 7% overvalued.

Result: Fair Value of $85 (OVERVALUED)

Still, Kodiak Sciences carries clear pressure points, including the risk of trial setbacks across Zenkuda or KSI-501 and the possibility of further funding-related shareholder dilution.

Find out about the key risks to this Kodiak Sciences narrative.

Another View on Kodiak Sciences' Valuation

The first narrative pegs Kodiak Sciences at $85 per share and calls the stock 7% overvalued. A different lens presents a very different picture. Our DCF model puts future cash flow value closer to $730.11 per share, implying the current $91.12 price trades at about 87.5% below that estimate. Which framework appears more realistic to you, and why?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Kodiak Sciences for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 32 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the Kodiak Sciences story feels split between excitement and concern, take that as your signal to act quickly and develop your own thesis using 3 key rewards and 4 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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