Wedbush Recommends Buying Cidara Shares After Rezafungin Deal
Cidara Therapeutics Inc (NASDAQ: CDTX) announced a development and commercialization deal Tuesday for its lead antifungal investigational drug, rezafungin.
The Analyst
Wedbush analyst Robert Driscoll upgraded Cidara from Neutral to Outperform and upped the price target from $2 to $4.
The Thesis
Cidara's partnership with Mundipharma is a significant positive, given the $30-million upfront payment, $9-million equity investment and near-term payments of $42 million, Driscoll said in a Tuesday upgrade note. (See his track record here.)
In return, Mundipharma receives global commercial rights to rezafungin excluding the U.S. and Japan, the analyst said.
Wedbush sees the total deal value to be in excess of $534 million.
The equity investment will be enacted by way of a private placement of 4.78 million new shares issued at $1.884 each, a 20% premium to the 10-day volume weighted average price, he said.
"Additionally, we see substantial synergies between both companies given Mundipharma already has a significant global commercial reach with annual sales over €2B in a variety of therapeutic areas including diabetes, respiratory, oncology, pain and biosimilars," Driscoll said.
The firm recommends buying Cidara shares given the removal of the financing overhang as well as an improving reimbursement environment for antibacterials and antifungals.
Specifically, Wedbush encourages long-term investors to buy into the shares ahead of the mid-2020 Phase 3 ReSTORE data readout.
The Price Action
Following the roughly 40% rally on Tuesday, Cidara shares were giving back some of the gains, trading down 11.91% at $2.07 at the time of publication Wednesday.
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Cidara Rallies On Development Deal For Lead Antifungal Medication
Latest Ratings for CDTX
Sep 2019 | Upgrades | Neutral | Outperform | |
Jun 2019 | Initiates Coverage On | Outperform | ||
May 2019 | Downgrades | Outperform | Neutral |
View More Analyst Ratings for CDTX
View the Latest Analyst Ratings
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