Scynexis (SCYX): Attractive Drug, Low Valuation, Consolidating Industry - Guggeheim
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Guggenheim analyst, Louise Chen, initiated coverage on shares of SCYNEXIS (NASDAQ: SCYX) with a Buy rating and a price target of $15.
The buy thesis has 3 points:
1) SCY-078 for IC (invasive candidiasis) has the potential to be best-in-class antifungal with the only IV to oral step down available for first line treatment of IC, if approved. Peak end market sales could be $1B+, by our estimates
2) SCY-078 for rVVC (recurrent vulvovaginal candidiasis, 4+ a year) has the potential to address an unmet need with greater efficacy than the standard of care. Peak end market sales could reach ~$500MM if the drug is approved. There could be spillover into acute VVC (women who get close to 4 yeast infections a year, or women with severe symptoms)
3) SCYX is an attractive company in a consolidating industry
SCYX’s Specialty Pharma peers trade at a forward EV/EBIT of 9.2x. Specialty Pharma companies have historically been acquired at EV/EBITDA multiples of 13.5x, which means the EV/EBIT multiple could be even higher. Although there is not a perfect comp for SCYX, other similar companies have market caps or have been acquired for a range of $163MM to $5,200MM leaving the company comfortably below the range with a market cap of only $48MM.
Shares of SCYNEXIS closed at $2.06 yesterday.
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Related EntitiesLouise Chen, Guggenheim
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