Stifel Raises Price Target On CymaBay Therapeutics

Stifel on Tuesday raised their price target on CymaBay Therapeutics Inc CBAY from $10.00 to $15.00.

Stifel wrote that, "We derive our 12-month target price of $15 by utilizing an NPV analysis on the projected arhalofenate revenue streams for gout patients. We use a discount rate of 16% and probability of success of 75%. We estimate arhalofenate's patent protection will expire in 2029."

Stifel also highlighted several key risks to their price target:

• Clinical risk: The company's leading drug candidate that treats gout is currently being evaluated at a high dosage which may cause toxicities and negative side effects to be shown in patients.
• Regulatory risk: The company may not receive approval of their gout drug candidate as CymaBay has no history of receiving regulatory approval for a drug.
• Commercial Risk: The market for its drug arhalofenate is very competitive, with many more established therapies already being sold
• Financial risk: Because of high research and development cost, CymaBay may continue to generate negative earnings. This would require the company to seek additional capital which has the potential to dilute the equity value of stock held by shareholders.