The company has a low float with a healthy short interest, which is something we always like to see in a stock. Too many shares short signals too many bears and potentially bad issues with the company, too small short interest often means a stock that could be overbought.
With the high barriers to entry in a very complex field, Cyclacel looks to be undervalued with a market cap of only $52M. Comparatively, Sunesis Pharma has a market cap of $275M -- more than 5 times the market cap of Cyclacel.
Sunesis's drug candidate vosaroxin, also designed to treat AML, is currently undergoing a Phase III study in patients with relapsed or refractory AML.
Sunesis, like Cyclacel, was under the radar for some time causing it to be very undervalued. On May 9th, 2012, I wrote an article featuring Sunesis when the stock was trading around $2.70. Today, Sunesis trades for around $5.35. The comparison above is not meant to spark a debate which drug or company is better, but rather to show the investment opportunity Cyclacel may provide, and to show that it is very undervalued. Having said that, vosaroxin will not be a frontline drug, where sapacitabine likely will be, which equates to more money potential for sapacitabine.
The chart has been in an uptrend and after forming a wedge, it looks to be set to break out again, especially when we look at the last candle for yesterday's trading session. The first price level to watch is $6.16-$6.20, and then a test of the highs in the $8s could be in range.
We believe Cyclacel might be one of the most undervalued speculation investments around. The data so far looks promising, and more data is expected by the end of the current quarter.
FDA approval of any of its pipelined drugs could see a stock price 5 times its current value, which would still result in a market cap less than Sunesis's current valuation. If the data continues to be positive for sapacitabine, a one year target of $15 to $20 is within reach for Cyclacel.
*Data sourced from Nasdaq.com.
**Data sourced from Yahoo Finance.
Disclosure: Author Scott Matusow is Long CYCC
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