Florida Biotech Completes Enrollment in 'Pivotal' Drug Trial

Florida-based Cyclo Therapeutics Inc. (CYTH:NASDAQ), a clinical-stage biotechnology company, reported its second-quarter financial results and gave a business update this week.

The company reported US$.12 million in revenue and a net loss of US$0.21 per diluted share but noted it had completed enrollment in its "pivotal" TransportNPC™ trial of Niiemann-Pick Type C1, a rare progressive genetic disorder.

If the 48-week data from the study demonstrate significance, Cyclo plans to submit a New Drug Application (NDA) to the Food and Drug Administration (FDA) and a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) in the second half of 2025.

"Equipped with the positive support, feedback, and alignment from our recent health authority interactions with both the FDA and EMA coupled with the completion of enrollment, we are highly focused on the interim data readout expected in Q1 2025," said N. Scott Fine, chief executive officer of Cyclo Therapeutics. "What this means is that we believe we will be generating the data required to provide a much-needed treatment option for the treatment of NPC1."

Based on the future of those applications, analyst Swayampakula Ramakanth of H.C. Wainwright & Co. reiterated the firm's Buy rating on the stock.

Based on the future of those applications, analyst Swayampakula Ramakanth of H.C. Wainwright & Co. reiterated the firm's Buy rating on the stock with a 12-month target price of US$3 per share.

"We derive our price target based on a risk-adjusted net present value (rNPV) analysis of projected future revenues from CYTH's product candidates, assuming a 9% discount rate, and a 0% terminal growth rate," Ramakanth wrote in an updated research note on Friday.

"We derive a rNPV of (US)$469.7 for the products and add in net cash and cash equivalents of (US)$1.1M, to arrive at a 12-month price target of (US)$2.83 per diluted share, which we round to (US)$3.00."

A 'Transformative Time' for Company

Fine said the quarter was a "transformative time" for the company and called the completion of enrollment in the Phase 3 TransportNPC™ trial of Niemann-Pick Type C1 "a landmark milestone."

The company said a Qualification for Priority Review Voucher (PRV) is expected upon NDA submission.

The company's Trappsol® Cyclo™, an orphan drug designated product in the United States and Europe, is the subject of four formal clinical trials for Niemann-Pick Disease Type C1. The company said it is also conducting a Phase 2b clinical trial using Trappsol® Cyclo™ intravenously in early Alzheimer's disease based on encouraging data from an Expanded Access program for Alzheimer's disease.

Clinical Studies Show Encouraging Results

According to the National Organization for Rare Disorders (NORD), "Niemann-Pick disease type C (NPC) is a rare progressive genetic disorder characterized by an inability of the body to transport cholesterol and other fatty substances (lipids) inside of cells. This leads to the abnormal accumulation of these substances within various tissues of the body, including brain tissue. The accumulation of these substances damages the affected areas."

Ascendiant Capital Markets analyst Lucas Ward maintained the firm's Buy rating and a 12-month target price of US$2.60.

There is currently no cure for the disorder, but the group said treatments are directed toward specific symptoms in each individual, which can vary.

"Treatment of NPC may require the coordinated efforts of a team of specialists," NORD said. "Pediatricians, neurologists, ophthalmologists, pulmonologists, gastroenterologists, and other healthcare professionals may need to systematically and comprehensively plan an affected child's treatment."

Cyclo said on its website that Trappsol® Cyclo™ is a proprietary formulation of hydroxypropyl beta cyclodextrin that multiple clinical studies have shown has encouraging results in effectively managing the transportation of cholesterol.

"Taking the place of the defective NPC1 protein, Trappsol® Cyclo™, with its cyclic structure, facilitates the transport of accumulated cholesterol out of cellular lysosomes so it can be further processed and excreted out of cells," the company said.

The Catalyst: 'Large Upside Opportunities'

In a research note written on May 23, Ascendiant Capital Markets analyst Lucas Ward maintained the firm's Buy rating and a 12-month target price of US$2.60 for the stock, believing the valuation "appropriately balances high risks with the company's high growth prospects and large upside opportunities."

"With its main product in Phase 3 trials and under Fast Track designation, we believe CYTH has a clear path to substantial value creation based on interim data and FDA evaluation of its NDA," Ward wrote. "Approval of Trappsol Cyclo for NPC would also bode well for an AD (Alzheimer's Disease) licensing deal."

According to Skyquest, the global rare disease treatment market size was valued at U$134.91 billion in 2022 and is poised to grow from US$152.18 billion in 2023 to US$398.87 billion by 2031, growing at a CAGR of 12.8%.

"These disorders, often referred to as orphan diseases, collectively impact a relatively small population, making them a challenge for research and development due to their scarcity and complexity," Skyquest noted. "Despite their individual rarity, the combined prevalence of rare diseases is significant, affecting millions worldwide."

Ownership and Share Structure

About 8% is owned by insiders and management, according to Reuters. Strategic entities own about 31%, and institutions own about 13%. The rest is retail.

Top shareholders include Rafael Holdings Inc. with 31.47%, Armistice Capital LLC with 5.23%, EPIQ Capital Group LLC with 2.85%, the CEO Fine with 2.59%, Founders Fund with 2.06%, and C.E. Rick Strattan with 1.68%.

It has about 28.7 million shares outstanding, including 17.28 million free-float traded shares. Its market cap is US$35.15 million, and it trades in a 52-week range of US$2.12 and US$0.89.

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