In another installment of highlighting various investment opportunities, today, I'm going to cover CytRx Corporation (NASDAQ:CYTR). As a biotech guy myself, I'm always interested in up and coming biotech outfits. Not only do they often have the potential to jump 100% or more in a single day when a pivotal drug study is released or a new drug is approved, but given the paltry research pipelines in big pharma, these cash-rich companies are scooping up biotechs left and right, often at premiums exceeding 100% as well. So, here's some background on CytRx:
- Pipeline: 3 Oncology Compounds with Human Data
- Platform: Technology to deliver anti-cancer agents directly to tumor
Key Pipeline Compound INNO-206
I was looking at some of the publicly available info on their pipeline and there's a lot of excitement around INNO-206. Most recently, the drug was granted FDA approval for orphan drug designation for pancreatic cancer (press release). With this designation, generally, an orphan drug can enjoy market exclusivity for a seven year period, realize tax credits on clinical trial expenses and sometimes be exempt from the FDA user fee (estimated at $1.8 Million). These are all beneficial accoutrements of the orphan drug status aside from the fact that the FDA thinks highly enough of the prospects for the compound to review and approve the designation. CytRx believes INNO-206 has attributes that improve on native doxorubicin (a commonly prescribed chemotherapeutic) including a reduction in adverse events, efficacy improvements and more targeted tumor delivery. This molecule is presently moving into Phase II. Other key compounds include Tamibaratone and Bafetinib (both in Phase II), which will be reviewed separately.
In the News
Just this week, there was a pretty big announcement (TheStreet.com) outlining the completion of the sale of Molecular Chaperone Assets To Orphazyme in a deal worth up to $120 Million. In a report from Zacks Research, the analyst put a $1.80 price target on the stock, which indicates a ~100% return from current prices. Obviously, with no commercial drugs approved, there are no revenues from that aspect each year, but Zacks has predicted that their diversified oncology portfolio represents substantial commercial potential. As evident by the lucrative margins enjoyed by the likes of key cancer players like Genentech and Amgen (NASDAQ:AMGN), cancer drugs are sometimes relatively low-volume but command monthly fees of $10,000 dollars or more. Any estimates of pricing and volumes for CrtRx molecules would be premature at this time, but the simple notion of multiple candidates moving through the pipeline, the potential multi-billion dollar market potential and acquisition premiums are certainly driving forces to drive shares higher in the coming year.
This is part of a paid, but independent Research Series on CytRx. The views and opinions expressed in this Series are purely my own. I have no positions in CytRx, and no plans to initiate any positions within the next 72 hours.. Please review the Disclosure Policy relevant to this series.