Why This Analyst Sees Cidara Nearly Doubling

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Earlier this week, Cidara Therapeutics Inc. (NASDAQ: CDTX) announced a huge deal that catapulted the stock up nearly 50%. While this seems to be the big break Cidara needs, speaking in the long-term sense of this business, one analyst believes the stock could nearly double in the next 12 months.

On Tuesday, Cidara announced that it has entered into a strategic partnership with Mundipharma to develop and commercialize Cidara’s rezafungin for the treatment and prevention of invasive fungal infections.

What stands out with this deal is the sheer amount of money that Cidara can make. Although all the money won’t come at once, it will be smooth sailing ahead for Cidara, assuming positive results for its ongoing trials.

Under the terms of the agreement, in exchange for granting Mundipharma exclusive commercialization rights to rezafungin outside the United States and Japan, Cidara will receive a $30 million upfront payment and Mundipharma will make a $9 million equity investment in Cidara. Cidara also will receive an additional $42 million in near-term funding to support the global Phase 3 Restore and Respect trials for the treatment and prevention of fungal infections.

Additionally, Cidara is eligible to receive development, regulatory and commercial milestone payments, representing a total potential transaction value of $568 million plus double-digit royalties. Cidara will continue to lead the ongoing global Phase 3 development programs for rezafungin with the support of Mundipharma. The companies may pursue additional indications or formulations of rezafungin.

Wedbush upgraded Cidara to an Outperform rating and raised its price target to $4 from $2, implying an upside of 88.6% from the most recent closing price of $2.12. The boutique brokerage firm detailed in its report:

We see the partnership as a significant positive given the upfront addition of $30M in cash and a $9M equity investment to the balance sheet and near term payments of ~ $42M. Additionally, we see substantial synergies between both companies given Mundipharma already has a significant global commercial reach with annual sales over €2B in a variety of therapeutic areas including diabetes, respiratory, oncology, pain and biosimilars. Given the financing overhang removal as well as an improving reimbursement environment for antibacterials/antifungals, we recommend shares of CDTX and encourage investors with a long-term view to be buyers ahead of the mid-2020 Phase 3 Restore data readout.

Shares of Cidara traded up about 4% to $2.21 on Thursday, in a 52-week range of $1.22 to $4.95. The consensus price target is $6.83.


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