Oppenheimer & Co. analyst Dr. Leland Gershell, in a research report published on July 22, 2024, provided an update on NuCana Plc. (NCNA:NASDAQ) ahead of the company's upcoming first look at its randomized Phase 2 trial in metastatic colorectal cancer. The analyst maintained an Outperform rating and a 12-18 month price target of US$150.00 on the stock.
Gershell anticipates the data readout to occur in late August or September, stating, "We look forward to the first look from NCNA's randomized Phase 2 trial in metastatic colorectal cancer . . . as it could show meaningful clinical differentiation for NUC-3373 vs. 5-fluorouracil (5-FU) as part of the standard-of-care regimen (chemo+Avastin) for second-line disease."
The analyst believes that NUC-3373 has the potential to show better safety and tolerability compared to 5-FU, which "would support prospects to displace 5-FU in this and other oncology settings (~500K North Americans treated annually)." Gershell added, "An efficacy advantage on progression-free survival (PFS) would be a home run."
Regarding expectations for the NuTide:323 trial, Gershell noted, "We should see ~six months PFS for the FOLFIRI+bev control per historical data. From our review of prior '3373 results, we could see a few months' incremental PFS in the active arm, with the prospect of less neutropenia—a clear win over 5-FU."
The analyst concluded, "With shares seeming to reflect little credit for any future success potential, we encourage investors to take a close look heading into this readout, which we believe could ignite investor interest in NCNA."
NuCana's strategic focus includes advancing its pipeline of next-generation chemotherapeutics, with NUC-3373 and NUC-7738 as key candidates. The company is also expecting data presentations on NUC-7738 at the upcoming ESMO conference.
Gershell highlighted NuCana's financial position, stating, "Most recently-reported cash resources (as of 3/31) were £12.9M, which the company expects to fund its business plan into 1Q25."
Oppenheimer's valuation methodology for NuCana is based on a risk-adjusted revenue multiples analysis. "We project peak un-risk-adjusted US NUC-3373 sales of US$504M, to which we apply a 6x multiple, in line with 5-8x industry average. We apply a 20% discount rate to future revenue, and assign 65% probability of success," Gershell explained.
With an Outperform rating and a price target of US$150.00, representing a potential return of approximately 4,930% from the price at the time of the report of US$2.98, Oppenheimer sees significant upside potential for NuCana.
The analyst concluded, "With shares seeming to reflect little credit for any future success potential, we encourage investors to take a close look heading into this readout, which we believe could ignite investor interest in NCNA."
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