I am neutral on GlycoMimetics (NASDAQ:GLYC), as its attractive stock price and high potential pipeline are offset by the high risk in its investment thesis.
GlycoMimetics is a clinical-stage biotechnology company that focuses on developing glycobiology-based therapies and treatments for cancers, including acute myeloid leukemia.
The company is dedicated to improving the lives of cancer patients by discovering and developing new, small-molecule glycomimetic product candidates. (See GLYC stock charts on TipRanks)
Strengths
GlycoMimetics is developing an investigational drug candidate, uproleselan, a specific antagonist for E-selectin, for the potential treatment of acute myeloid leukemia, and the candidate is being evaluated for efficacy across different types of patient populations.
The company is also conducting Phase 1b clinical trials to evaluate its own candidate, GMI-1359, which is both an E-selectin and chemokine receptor CXCR4 antagonist.
Recent Results
GlycoMimetics recorded an increase in research and development expenses to $10.2 million for the second quarter of 2021, as compared with $9.9 million on a year-over-year basis. The increase in research and development expenses was mostly due to the increase in the ongoing Phase 3 clinical trial of uproleselan in patients with relapsed/refractory acute myeloid leukemia in the US, Europe, and Australia.
It is a fact that biotechnology companies often lose money for years before they start earning in earnest on the heels of a mineral or treatment discovery. However, investors should be wary of companies that are burning through their cash too quickly.
According to GlycoMimetics’ second quarter of 2021 report, the company has a cash pile of $119 million with zero debt. Although the company seems to be in a fairly good position, investors need to consider how much difficulty it will face raising more cash to fuel faster growth.
Investors should keep an eye out to see how the company fares in the next few quarters. Furthermore, GlycoMimetics stock is difficult to value given that it is burning through cash and is unprofitable at the moment.
Wall Street’s Take
From Wall Street analysts, GlycoMimetics earns a Moderate Buy analyst consensus, based on two unanimous Buy ratings in the past three months. Additionally, the average price target of $14.50 puts the upside potential at 541.6%.
Summary and Conclusions
GlycoMimetics looks like an interesting opportunity at the moment. On the one hand, the stock has massive upside potential. On the other hand, the stock is incredibly risky at the moment, burning cash at a rapid rate, and is not profitable yet.
Overall, the stock will likely turn out to be either a very lucrative buy or a terrible investment. As a result, this stock appears to be the best suited to speculative investors and even then, a small position size would probably be prudent.
Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.
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