IMO, and I'm guessing a lot of other Cynata holders would agree, the share price has been battered because of a lack of announcements/data that clearly demonstrate how effective the Cymerus process is. Yes, we had the Nature article last year for GvHD, however the delays with the P2 trial (maybe Fuji's fault, maybe it's just Covid ruining everything) have lowered the market's value of this indication. In fact, it appears the market has all but written off the value of ALL the indications Cynata are targeting/running trials for, and is valuing us as pre-clinical. To reverse this, we need more positive data and announcements from the company. I believe if management can meet the 6 Key Objectives for 2021, they will deliver us significant positive catalysts which will have to be reflected in the stock price. To remind everyone of the objectives, they are:
- Execute on the expansion of the clinical pipeline and commence new clinical trials
- Execute strategy to accelerate recruitment in the MEND (COVID-19) phase 2 clinical trial
- Significant recruitment progress in the active SCUlpTOR (OA) phase 3 clinical trial
- Optimise manufacturing capabilities to enhance scale-up efficiencies
- Execute US regulatory strategy, to assist in driving global commercialisation
- Continue engagement in partnering discussions, and actively pursue new opportunities
So far, I would objectively say that management have done a decent job at Point 1 but there is still lots more work to do, Point 2 is complete, while there is no public information available to validate Points 3-6.
For an idea of what a positive catalyst can do to a stock's price, have a look at Biogen in the US overnight. It was up 60% at one point (finished up 38%). This is from a starting market cap of $43 Billion (yes, with a 'B'),
hence at one stage the market added over $25B USD to the stock price of Biogen for this indication alone. Of course, this is because their alzheimers drug was granted FDA approval, which we are a fair way away from getting. However, I think it is prudent to remind everyone that Point 5 of management's key objectives for 2021 is for Cynata to "Execute US regulatory strategy, to assist in driving global commercialisation." If this can be validated (i.e. receiving an IND), Cynata will be well on the way to creating serious value for shareholders.
Just referring back to the Biogen example again, the market for Alzheimer's is estimated to be worth
$5.6B USD by 2027 (Acumen Research and Consulting, 2021). The market for Diabetic Foot Ulcers, of which Cynata is in the final stages of planning a P2 trial for, is estimated to be worth
$11BUSD by 2027 (Fortune Business Insights, 2020). So Cynata are about to start a P2 trial with quick readouts, in a market worth 2x Alzheimers, yet the company is worth 0.3% of the value the market assigned the Alzheimers indication? If you ignore every other indication we're exploring and apply the probability of successfully completing P2 and P3 in DFU ([P2-to-Launch probabiliy]/[P3-to-Launch probability] = 15%/62%) of 24% (Nature
https://www.nature.com/articles/d41573-019-00074-z, 2019), the market is implying that we only have a 3% chance of receiving any kind of regulatory approval, which I personally think is too low.
I believe this underscores just how important Point 5 is to the valuation of Cynata presently. If we can increase the probability of regulatory approval from the current 3% to the market 62% (assuming we pass P2), that would result in a
valuation uplift of 21x. Sounds crazy, but don't forget that other ASX biotechs such as Imugene languished between 1-2c for years before exploding to 50c lately.
Anyway, I'm interested to hear other thoughts about this and recommend doing your own research.
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