Can Fite BioPharma Ltd (CANF)

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CANF: Beginning to Flex Its Muscles; Initiating with OUTPERFORM Rating, $6.00 Price Target

by Can-Fite BioPharma, Contributor
February 24, 2022 1:09 PM | 3 min read

https://www.benzinga.com/amp/content/25808959

Summary

We are CORRECTING our initiating coverage of Can-Fite BioPharma Ltd. (“Can Fite” or the “company”), a clinical-stage pharmaceutical company, with an OUTPERFORM rating and $6.00 price target (CORRECTION from the previous, initiated $2 price target). With a pipeline of proprietary small molecule drugs treating inflammation, cancer and liver diseases, we believe Can-Fite is poised to register material progress in commercializing its compounds in 2022, including the imminent release of Phase III trial data for the treatment of psoriasis. Further, with a business model predicated on licensing compounds to leading international pharmaceutical players, we believe new contracts and territory expansion will refocus investors on Can-Fite’s myriad positives. As such, we view the risk/reward in CANF as impressive and are initiating coverage with an OUTPERFORM rating and a $6.00 price target.

Key Points
Focused on A3 adenosine receptor (“A3AR”). A3AR has a high incidence in cancer and inflammatory cells, which allows the company’s compounds to target A3AR and destroy the corresponding cells. Given the low expression of A3AR in normal cells, Can-Fite’s proprietary products have demonstrated high levels of safety.


Demonstrating efficacy: First up, psoriasis. The Phase III COMFORT study, which is designed to test Can-Fite’s Piclidenoson compound superiority in treating moderate to severe plaque psoriasis (versus the placebo) and non-inferiority compared to Amgen’s Otezla®®, was completed in January 2022. We expect 120M release of the data, which is set for 1Q22, to be a material catalyst. Psoriasis is a projected $40 billion + market.

Next in cue: Compounds to combat Hepatocellular Carcinoma (“HCC”) and Nonalcoholic steatohepatitis (“NASH”), a type of non-alcoholic fatty liver disease (“NAFLD”). Can-Fite’s second key compound, Namodenoson, is focused on treating HCC (liver cancer) and NASH. After a successful Phase II trial for HCC, Can-Fite is preparing to launch a Phase III Liver cancer study in 1Q22; the liver cancer market is estimated at approximately $3.8 billion.

In January 2022, Can-Fite enrolled their first patient for a Phase IIb trial to test the efficacy and safety of Namodenoson in treating NASH, a growing disease for which there is currently no FDA approved treatment, The market size is projected to be approximately $35 billion by 2025.

Erectile disfunction, cannabis and animal osteoporosis treatments are all in preclinical development.

Can-Fite business models sharesrisks,still offers impressive rewards. Can-Fite is entirely focused on achieving approval for its compounds. The company licenses the commercialization of its compounds for specific territories and ailments, which includes up front and milestone payments and a double-digit royalty rate. Given that there are still crucial territories unpartnered (United States, Western Europe, United Kingdom, Ireland, Japan among others) we see the signing of future licensing deals as key catalysts.


Strong, effective management team.

We project the company will need approximately $10 million in incremental financing in 2023, via either equity offerings or milestone/new territory licensing expansion.

Our Discounted Cash Flow model registers a CANF value of $7.09. We have conservatively projected only Piclidenoson for psoriasis receives regulatory approval in the projected time period and have assumed further dilutive equity raises.