Shaws very bullish Cynata Therapeutics (CYP) Rating: Buy | Risk:...

Shaws very bullish

Cynata Therapeutics (CYP)
Rating: Buy | Risk: High | Price Target: $1.20
Solving the Stem Cell Production Problem. Initiation of Coverage with a BUY and $1.20 TP
Event: Shaw and Partners initiates coverage of Cynata Therapeutics (CYP) with a BUY rating and a $1.20 target price.
Recommendation: The data around CYP’s MSCs - both its own and that developed by external groups - and the partnering deals it is putting in place increasingly point towards validation and industry acceptance of its process for producing MSCs. CYP still needs to show that its MSCs are at least therapeutically equivalent to harvested cells, however it has made significant steps forward towards being the only likely viable MSC solution for large scale clinical applications. Thanks to Japan’s relatively quick approval framework for stem cell therapeutics, time to market (~2020) is also potentially quite soon. In addition the company has sufficient cash to meet major milestones in the coming 18-24 months. We believe these factors aren’t recognised by CYP’s market capitalisation of $38m. Our valuation, based on a discounted cash flow, determines a value of A$1.20 per share which values the company well below recent relevant acquisition prices. BUY