3. CytomX Therapeutics, Inc. (NASDAQ:CTMX)
Number of Hedge Fund Investors: 24
Based in San Francisco, CytomX Therapeutics (NASDAQ: CTMX) is a biotechnology company that uses its patented Probody platform to produce advanced cancer treatments. This technology reduces adverse effects and increases therapeutic efficiency by producing biologics that are conditionally activated.
Analysts have recommended a “buy” based on the average price objective of $5.77, implying that investors may potentially profit by 303.50% from the current stock price of $1.43. In the first quarter of 2024, there were 24 hedge funds for CytomX Therapeutics, Inc. (NASDAQ:CTMX) in IM’s database. The company’s biggest shareholder is Mark Lampert’s Biotechnology Value Fund / BVF Inc with 6,595,801 shares worth $14.38 million.
Among the drugs in its pipeline is CX-904, a bispecific antibody created in collaboration with Amgen that targets CD3 on T cells and EGFR on tumor cells. Due to the unsatisfactory Phase 1a trial findings for their cancer medication CX-904, which showed few favorable responses among patients with pancreatic cancer, CytomX’s shares fell by 72% in May 2024. However, Phase 1a is underway, and dosage escalation findings are anticipated by year’s end in 2024. Second, CX-2051 is a drug-antibody combination that targets EpCAM in malignancies such as prostate, breast, and colorectal. The first data should be available by early 2025. Recently, CTMX confirmed that it has partnered with Merck on a supply agreement and will be testing CX-801 in combination with pembrolizumab for various kinds of solid tumors.
With a market value of $113.75 million, CTMX has $151 million in accessible cash, consisting of $114.1 million in short-term investments and $36.2 million in cash and equivalents. The company’s balance sheet is comparatively strong, with $216.4 million in total liabilities (mainly delayed sales) but no significant financial debt. Nevertheless, CTMX has a cash runway of around 1.4 years, indicating a possible need for further capital and dilution concerns in the near future. This is due to a quarterly cash burn rate of 26.39% since 2023.
CYMX’s annual revenue grew by 90.38% YoY from $53.16 million to $101.21 in 2023. In Q1 FY2024, CTMX announced a net income of $13.8 million, or $0.17 per share, which exceeded the forecast of $0.01 per share due to higher-than-expected revenue recognition, including $10 million of milestones obtained from the Astellas collaboration. The stock rose by approximately 200% in May when CTMX announced the release of early Ph1a ‘904 results sooner than previous guidance.
The company’s strength is that the Probody platform has the potential to develop safe and efficient cancer therapies. Even though the early data is inconsistent, it shows promise, particularly when working with top pharmaceutical companies.
The risk is associated with the limited financial runway and the possibility of future dilution. Its pipeline is still in its early stages, so real results and revenue growth remain a cause for concern.
Although CytomX Therapeutics is a promising biotech company with a revolutionary Probody platform, investors should be aware of the risks associated with its short financial runway and the possibility of dilution. Investors are optimistic about the stock, even if the company’s valuation seems low. It is worthwhile to keep an eye on CTMX for any future developments.
