H.C. Wainwright analyst Raghuram Selvaraju assumed coverage of CytRx (NASDAQ:CYTR) with a “buy” rating and price target of $4. The stock was quoted at $1.91 in afternoon trading on April 7.
CytRx’s two principal value drivers include aldoxorubicin, which has demonstrated proof-of-concept clinical activity in soft tissue sarcomas and several other solid tumor types, and is being advanced in multiple clinical studies by CytRx’s partner, NantCell; and the Linker Activated Drug Release platform, which is designed to create optimized drug conjugates that employ albumin as a delivery mechanism and toxic payloads based on well-known agents with a history of successful use in anti-tumor drugs.
“In our view, CytRx has a much more focused and capital-efficient business model today, which relies on the generation of proof-of-concept data with its candidates followed by judicious partnering with more established entities, thus reducing the operational spend and ensuring efficient advancement of clinical programs,” Mr. Selvaraju writes.
For example, the NantCell partnership connects CytRx to Dr. Patrick Soon- Shiong, who has had prior success in developing albumin-conjugated anti-cancer drugs.
Mr. Selvaraju said CytRx’s share price has been suffering from results of a Phase 3 trial of aldoxorubicin in 2016 that narrowly missed statistical significance in progression-free survival.
“However, we note that the company now has a qualified partner on board for aldoxorubicin, reducing pressure on cash spend, and is developing several early-stage candidates that appear promising in preclinical models,” he added.
In the wake of a reverse stock split late last year, the stock also has been sliding due to dilution fears and a paucity of clinical-stage catalysts. “However, we believe that this period is now drawing to a close and rapid advancement of both aldoxorubicin and CytRx’s earlier-stage pipeline should begin to accrete value,” Mr. Selvaraju said.
