Kymera Surges 70% in 3 Months: Buy, Sell or Hold the Stock?

Shares of Kymera KYMR have surged 70.7% in the past three months compared with the industry’s gain of 9.7%. The stock has also outperformed the sector and the S&P 500 index during this timeframe.

This clinical-stage biotechnology company is pioneering the field of targeted protein degradation (TPD) to develop drugs for various immunological diseases.

KYMR Outperforms Industry, Sector & S&P 500

While the recent update in its deal with pharma giant Sanofi SNY caused a setback, investors are impressed with its recent collaboration with biotech giant Gilead Sciences, Inc. GILD.

KYMR’s License Deal With GILD Impresses Investors

Kymera recently entered into an exclusive option and license agreement with GILD to accelerate the development and commercialization of a novel molecular glue degrader (MGD) program targeting cyclin-dependent kinase 2 (CDK2) with broad oncology treatment potential, in breast cancer and other solid tumors.

Per the companies, CDK2-directed MGDs are a new type of drug designed to remove CDK2, a key contributor to tumor growth, rather than just inhibiting its function.

While traditional inhibitors of CDK2 prevent it from working but often interfere with similar proteins, leading to undesired side effects, MGDs have the potential to provide more precise, safe and effective treatments for cancers that rely on CDK2 activity by selectively removing this protein from cells.

Under the terms of the agreement, Kymera will receive an upfront payment of $85 million and potential option exercise payments. The total payments will range up to $750 million.

Kymera may also receive tiered royalties ranging from high single-digit to mid-teens on net product sales under the collaboration. While Kymera will lead all research activities for the CDK2 program, Gilead will have global rights to develop, manufacture and commercialize all products resulting from the collaboration if it exercises its option to exclusively license the program.

KYMR’s Deal With Sanofi

Kymera had collaborated with Sanofi for the development of drug candidates targeting IRAK4, including KT-474/SAR444656, outside the oncology and immuno-oncology fields.

However, Sanofi informed Kymera that it has selected KT-485/SAR447971, an oral, highly potent and selective development candidate targeting IRAK4 for immuno-inflammatory diseases, to advance into clinical studies.

The candidate was discovered by Kymera.

KT-485 is being prioritized for development under the companies’ existing IRAK4 collaboration following extensive preclinical work supporting its robust development potential. The candidate is expected to advance into early-stage testing next year.

Consequently, Sanofi has decided to let go of KT-474, which was being evaluated for the treatment of hidradenitis suppurativa (HS) and atopic dermatitis (AD) in two phase IIb dose-ranging studies.

Sanofi will not develop KT-474 any further. The company has also decided to exercise its participation election right for the IRAK4 target under the terms of the collaboration agreement. Per the agreement, Kymera achieved a $20 million milestone in the second quarter of 2025 (related to preclinical activities associated with KT-485).

Kymera is eligible to receive up to $975 million in potential clinical, regulatory, and commercial milestones related to KT-485, including an additional milestone upon the initiation of phase I clinical testing.

Our Take on Kymera’s Recent Performance

While the oncology deal with GILD looks promising and the subsequent influx of cash is positive, there is still a long way to go. 
Sanofi's decision to advance preclinical IRAK4 degrader KT-485 rather than advancing KT-474 delayed milestone payments for Kymera that could have been achieved on the potential approval of KT-474, which had moved to phase IIb studies in late 2023.

Nonetheless, Kymera’s novel TPD approach is promising, and the pipeline progress is encouraging. In April, Kymera initiated dosing in the KT-621 BroADen phase Ib study in moderate to severe atopic dermatitis (AD) patients. Kymera plans to begin two parallel phase IIb studies in AD and asthma patients in the fourth quarter of 2025 and the first quarter of 2026, respectively.

Kymera named KT-579, an oral IRF5 degrader, as its lead development candidate and intends to advance the program into phase I testing in early 2026. IND-enabling studies are ongoing.

Kymera currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


 

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This article originally published on Zacks Investment Research (zacks.com).

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