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On Wednesday, Guggenheim Securities adjusted its price target for Adaptimmune Therapeutics plc (NASDAQ:ADAP) shares, reducing it from $3.00 to $1.75 while maintaining a Buy rating on the stock. The decision follows a detailed review of the company’s annual report and a recent fourth-quarter business update. The stock, currently trading at $0.25, has experienced a significant decline of over 83% in the past year and is trading near its 52-week low. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations.
Analyst Michael Schmidt from Guggenheim revised the sales forecast for Adaptimmune’s Tecelra, the company’s lead product, based on management’s commentary regarding the patient diagnostic and apheresis pipeline. The new estimate anticipates approximately $5.0 million in sales for the first quarter of 2025, equating to treatment for eight patients, and a total of $40 million for fiscal year 2025, assuming 60 patients receive dosing. However, the peak sales estimate for the sarcoma franchise in the U.S. was slightly reduced to approximately $330 million. InvestingPro data reveals that while the company achieved impressive revenue growth of 195% in the last twelve months, analysts anticipate a sales decline in the current year.
In addition to the sales forecast adjustments, Guggenheim also updated its operational expense (OpEx) expectations for Adaptimmune and removed the uza-cel estimates from its model. The price target was consequently lowered to $1.75 per share. Despite these changes, the firm recognizes the high risk of Adaptimmune struggling to continue operations independently without securing additional financing within the year. InvestingPro analysis shows the company holds more cash than debt on its balance sheet, with a current ratio of 2.92x, though it’s quickly burning through available cash. Get access to the comprehensive Pro Research Report for detailed insights into Adaptimmune’s financial health and future prospects.
Adaptimmune has recently entered what Schmidt referred to as "survival mode," having implemented cost-saving measures this quarter, including a significant reduction in workforce by 29%. Nevertheless, Guggenheim sees potential value in the company’s commercial Tecelra franchise and the lete-cel opportunity, which has been granted Breakthrough Therapy Designation (BTD). With a current market capitalization of approximately $64 million and an EBITDA of -$41 million in the last twelve months, the market valuation appears to not fully reflect the intrinsic value of these assets.
The analyst suggested that Adaptimmune’s potential upside within the year could stem from a successful partnership or acquisition deal. Companies with existing investments in cell therapy for solid or hematological tumors could find strategic value in Adaptimmune’s commercial and late-stage assets, as well as its in-house manufacturing capabilities. Schmidt cited recent similar transactions and noted that potential suitors could include pharmaceutical companies with a history of business development in cell therapy platforms or commercial-stage biotech firms focused on cell therapy.
In other recent news, Adaptimmune Therapeutics has reported its fourth-quarter 2024 financial results, revealing product revenue of $1.2 million from its lead asset, Tecelra. The company has set a target of $25 million in sales for 2025, with expectations of a significant revenue increase in the first quarter of 2025. Adaptimmune has also amended its loan agreement with Hercules Capital (NYSE:HTGC), Inc., making a $25 million prepayment on the principal. This financial adjustment is part of the company’s strategy to manage its financial obligations more effectively.
Additionally, Scotiabank (TSX:BNS) analyst George Farmer has reduced the price target for Adaptimmune to $1.40, maintaining a Sector Outperform rating. Mizuho (NYSE:MFG) Securities, on the other hand, has reiterated its Outperform rating with a $1.50 price target. Both analyst firms highlighted the importance of Adaptimmune’s strategic cost reductions, with Mizuho noting the discontinuation of preclinical programs expected to save the company $75-$100 million over the next four years.
Despite a lack of detailed financials, Adaptimmune has acknowledged ongoing financial challenges, including going concern issues, and has engaged a bank to explore strategic options. The company is also focusing on expanding its treatment centers and exploring strategic partnerships to bolster its financial stability. These developments reflect Adaptimmune’s ongoing efforts to navigate its financial and operational challenges while aiming for profitability by 2027.
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