Cantor Fitzgerald Starts Bellicum Pharmaceuticals (BLCM) at Buy
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Cantor Fitzgerald initiates coverage on Bellicum Pharmaceuticals (NASDAQ: BLCM) with a Buy rating and a price target of $32.00.
Analyst Elemer Piros commented, "Bellicum's technology could make blood stem cell transplantation feasible for more than 13,000 U.S. patients, increasing the number of such procedures by 13-fold. We initiate coverage with a BUY rating with a $32/share 12-month TP."
The analyst highlighted:
Out of Options: Mismatched, so called haploidentical transplants are rarely performed due to the heighted risk of treatment related mortality (TRM). More than 30% of the mortality is due to Graft vs. Host Disease (GvHD, when the graft attacks the host's immune system) and severe infections.
There is Hope: Bellicum genetically modifies a portion of the donor immune T cells (BPX-501), in order to provide better control for infections and to eliminate donor cells, should they cause GvHD. BPX-501 treatment could be associated with improved survival in cancer, have a positive impact on TRM that is due to GvHD and severe infections.
Under Control: Of the 49 patients treated as of August, four developed uncontrolled GvHD. In all four, engineered T cells were eliminated by the antidote drug, rimiducid. No serious infections leading to death reported to date. All but one of the 25 blood cancer patients are alive. We expect an update at the American Society of Hematology (ASH) 2016 meeting, which will release abstracts on November 3rd. Based on existing clinical data, we believe that there is a 55% probability for BPX-501 to be approved in the EU by 2019 (45% in the U.S. by 2020). Our peak penetration sales estimate is $725 million in the EU and $1.2 billion in the U.S.
Valuation: We arrive at our 12-month price target of $32/share by adding the after-tax, risk-adjusted NPV of future cash flows from the BPX-501 transplant program. Our model does not currently include revenues from the CAR and TCR platforms. The probability-adjusted (55%, 45%), fully taxed (35%) NPV (15% discount rate) of future cash flows through 2035 is over $1 billion ($32/share, our target price), in our calculation. Bellicum ended 2Q16 with a cash and equivalents balance of $137 million, which provides a cash runway through 2017 according to our model. We estimate the need for an additional $100 million in capital, which could be sourced from potential licensing fees or from issuing new equity.
Shares of Bellicum Pharmaceuticals closed at $16.56 yesterday.
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