Is Zevra Therapeutics (ZVRA) Undervalued Amid Rare Disease Pipeline Catalysts?

The biotechnology sector, particularly companies targeting rare diseases, has long been a realm of high risk and high reward. Zevra Therapeutics (ZVRA) stands at an inflection point, with its pipeline of therapies for Niemann-Pick disease type C (NPC) and Vascular Ehlers-Danlos Syndrome (VEDS) generating significant investor interest. A discounted cash flow (DCF) analysis, combined with an evaluation of the company's financials and market dynamics, suggests that Zevra may be trading at a substantial discount to its intrinsic value. However, the path to unlocking this value hinges on the success of its clinical trials and the broader growth of the rare disease market.

Financials and Pipeline Progress: A Foundation for Growth

Zevra's third-quarter 2025 financial results underscore its improving commercial performance. The company reported net revenue of $26.1 million, driven by $22.4 million in sales of MIPLYFFA, its approved therapy for NPC according to the financial report. This represents a marked improvement from a net loss of $(0.69) per share in Q3 2024 to $(0.01) per share in Q3 2025 as reported. The company's cash position of $230.4 million, bolstered by a $150 million PRV sale, provides a robust runway into 2029.

The pipeline is equally compelling. Zevra submitted a Marketing Authorisation Application for arimoclomol (a potential therapy for NPC) to the European Medicines Agency (EMA), while its Phase 3 DiSCOVER trial for celiprolol in VEDS enrolled 44 patients by Q3 2025. Celiprolol has received Orphan Drug and Breakthrough Therapy designations in the U.S., and the trial is event-driven, requiring 46 qualifying clinical events to conclude. These milestones position Zevra to capitalize on two high-growth rare disease markets.

Market Dynamics: Rare Disease as a Growth Engine

The NPC and VEDS markets are expanding rapidly. For NPC, the 2024 market size in leading markets was approximately $60 million, with the U.S. accounting for 60% of this total. The market is projected to grow at a compound annual growth rate (CAGR) of 14.8% to 17.05% from 2025 to 2034, driven by novel therapies and improved diagnostics. Similarly, the VEDS segment, part of the broader Ehlers-Danlos Syndrome (EDS) market, is expected to grow at a CAGR of 18.9% during the same period, fueled by advancements in genetic testing and personalized therapies.

Zevra's MIPLYFFA already demonstrates strong market access, with 66% coverage for NPC patients, while OLPRUVA (for another indication) has 81% access according to the company's report. However, the company has scaled back OLPRUVA's commercialization efforts, focusing instead on its core rare disease pipeline. This strategic shift aligns with the sector's trend toward high-margin, niche therapies.

DCF Analysis: A Tale of Divergent Valuations

The DCF valuations of Zevra's stock reveal a wide range of outcomes, reflecting differing assumptions about growth rates and risk profiles. A DCF model by Simply Wall St estimates an intrinsic value of $104.13 per share, implying a 92% discount to the current price of around $8. Alpha Spread calculates a lower intrinsic value of $25.03, suggesting a 67% undervaluation, while ValueInvesting.io's $47.64 fair price indicates a negative upside of -569.9% relative to the $10.14 stock price according to the valuation analysis.

These discrepancies stem from variations in discount rates and revenue projections. For rare disease biotechs, industry-specific discount rates typically range from 10% to 15%, with higher rates applied to earlier-stage assets. Zevra's cash runway and recent PRV sale reduce some risks, but the success of its Phase 3 trials remains pivotal. If celiprolol achieves regulatory approval, its revenue could grow significantly, given the VEDS market's projected CAGR of 18.9%. Similarly, EMA approval for arimoclomol would expand MIPLYFFA's commercial potential into Europe.

Risks and Considerations

While the DCF analysis highlights undervaluation, investors must weigh several risks. Clinical trial outcomes are inherently uncertain, and the DiSCOVER trial's event-driven design could delay results. Regulatory hurdles, such as EMA's review of arimoclomol, also pose challenges. Additionally, competition in the rare disease space is intensifying, with therapies like Trappsol Cyclo and nizubaglustat entering the NPC market.

Conclusion: A High-Conviction Opportunity

Zevra Therapeutics occupies a unique position in the rare disease sector, with a robust cash position, a pipeline targeting high-growth indications, and a valuation that appears disconnected from its intrinsic potential. The DCF models, while divergent, collectively suggest that the stock is undervalued, particularly if the company achieves key regulatory and commercial milestones. However, the path to value realization is not without risks. For investors with a long-term horizon and an appetite for biotech's inherent volatility, Zevra presents a compelling case-one where disciplined capital allocation and pipeline execution could unlock significant upside.