HC Wainwright Upgrades Caladrius Biosciences To Buy, Sets $1.25 Price Target

Caladrius Biosciences Inc CLBS has recently entered into a global collaboration agreement with Hitachi Chemical Co.

H.C. Wainwright’s Raghuram Selvaraju upgraded the rating on Caladrius Biosciences from Neutral to Buy, with a price target of $1.25.

The Agreement

Selvaraju mentioned that the agreement included the purchase by Hitachi Chemical of 19.9 percent of Caladrius Biosciences’ cell therapy development and manufacturing services division, PCT, for $19.4 million.

Caladrius Biosciences intends to use the proceeds for continued expansion, as well as improvement in its PCT business.

“In addition, Hitachi Chemical in-licensed the company’s technology in cell therapy manufacturing for certain Asian regions with upfront and near term milestone payments totaling $5.6M,” Selvaraju said.

Hitachi Chemical will pay royalties on contract revenue and service fees for those territories.

The Value Of PCT

The PCT division has been generating robust revenue growth. In addition, Selvaraju expects the company to reduce operating expenses.

The cell therapy arena is also expected to grow, with more therapeutics entering the mid-to-late stage clinical trials and possibly commercial distribution.

According to the H.C. Wainwright report, “Management has guided that it expects PCT revenue to exceed $30M in 2016.”

Selvaraju expects revenue growth to persist as the PCT division matures, while its gross margins are also expected to improve over time.