H.C. Wainwright Makes Bullish Case for Cyclacel Pharmaceuticals (CYCC)
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H.C. Wainwright maintained a Buy rating on Cyclacel Pharmaceuticals (NASDAQ: CYCC) with a price target of $60. Analyst Andrew Fein sees positive risk/reward, as its pending AML readout may be detracting from valuation.
Fein explained, "We recognize that the company’s current $13.5M market cap makes Cyclacel not appetizing to a number of investors. That said, it is hard not to comment on what would classically count as an atypically positive risk/reward opportunity ahead of the pending readout of the pivotal SEAMLESS study in elderly AML patients unfit for induction therapy (number of events needed for final analysis reached). In our view, the positive risk/reward has less to do with the odds of success (which have not changed), and more to do with the depressed valuation ahead of the readout."
"We acknowledge that an outright survival win in SEAMLESS may be a long shot. However, we also know that the surprise element in AML can go both ways (just consider the diligence scramble following the Vyxeos AML win out of left field last March). That said, in biotech we are fundamentalists, and generally avoid risk/rewards theses (even in a case like this, where the current share price of $4.48 is disproportionally closer to zero than to $173, which according to our calculations may represent full value following a topline win in AML). Then, if we crop AML from the picture and only view valuation fundamentally as a function of the other two clinical programs running, Cyclacel still emerges as attractive," continued the analyst.
Fein added, "As a reminder, a Phase 1 study sapacitabine/seliciclib just showed good anti-tumor activity in pre-treated BRCA+ patients at ASCO (expansion cohort in breast cancer ongoing at Dana Farber), while a Phase 1 pan-oncology study of a second generation CDK2/9 inhibitor is ongoing (CYC065). In our view, were Cyclacel one of the many circulating private oncology companies with Phase 1 assets, these pipeline clinical programs alone would justify a pre-money valuation as a multiple of the current market cap of $13.5M (N.B. $15.9M in cash at hand). Overall, we look forward to the pending SEAMLESS readout, which in our view, in one way or another, will help liberate shares from its current valuation purgatory."
Shares of Cyclacel Pharmaceuticals closed at $4.48 yesterday.
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