Wedbush Downgrades CytomX Due To Lack Of Clarity On Development Paths

CytomX Therapeutics Inc CTMX reported disappointing third-quarter results and lacks clarity into the path forward for its wholly-owned PD-L1 Probody CX-072, according to Wedbush.

The Analyst

Wedbush’s Robert Driscoll downgraded CytomX Therapeutics from Outperform to Neutral while reducing the price target from $25 to $8.

The Thesis

CytomX Therapeutics reported a net loss of $23.7 million, or 52 cents per share, versus Wedbush’s estimate of a net loss of 33 cents per share, due to lower-than-expected revenue recognition, Driscoll said in the downgrade note.

The company had $325.7 million in cash and equivalents at the end of the third quarter. The analyst mentioned that although this can fund ongoing operations at least through the fourth quarter of 2021, CytomX Therapeutics could initiate an equity financing in the first quarter of that year.

Noting a lack of short-term catalysts, Driscoll said that there was lack of an ultimate development path for the company’s CX-072 compound. He wrote, “Although we note PD-1 refractory melanoma patients have few approved options available to them, the contribution of a PD-(L)1 to a combination regimen in this line of treatment remains unclear.”

The analyst said that CytomX Therapeutics had plans to initiate several additional combination studies of CX-072 which may provide clarity into the ultimate registration pathways.

Price Action

Shares of CytomX Therapeutics were trading down 6.72% at $5.55 at time of publication Monday.