Now could be the time to buy Clarity Pharmaceuticals Ltd (ASX: CU6) shares.
That's the view of analysts at Bell Potter, which believe the ASX biotech stock could generate big returns over the next 12 months for investors with a high tolerance for risk.
What is the broker saying about this ASX biotech stock?
Bell Potter notes that Clarity released its quarterly update this week. And while the company is continuing to burn through cash, the broker believes it has sufficient cash to take it deep into 2026. It said:
The company released its Q4 cash flow statement and quarterly activities report earlier today. Gross cash burn was ~$14m, net cash burn inclusive of the $10m R&D credit was ~$4m. We estimate the cash runway extends deep into CY26.
Its analysts also highlight that the ASX biotech stock will soon be meeting with the US Food and Drug Administration (FDA). It adds:
The company is preparing to meet with the FDA for the purposes of a discussion regarding an approval study in patients with biochemical recurrence of prostate cancer. A future approval in this indication would see 64Cu-SAR-bisPSMA competing directly with currently marketed PSMA agents. While the potential clinical benefits of the copper isotope are yet to be proven in a large study, the sensitivity to smaller tumours is likely to be a key focus for investigators and patients alike. We expect strong interest from US investigators and FDA.
Big return potential
According to the note, the broker has retained its speculative buy rating on the company's shares and lifted its price target by a whopping 150% to $10.00 (from $4.00).
Based on the current Clarity Pharmaceuticals share price of $6.60, this implies potential upside of 52% for investors over the next 12 months.
Bell Potter believes that the huge increase in its valuation of the ASX biotech stock is justified given recent transactions in the industry. Particularly given how it feels higher prices are being paid for inferior assets. It summarises:
Valuation is raised to $10.00 from $4.00. We acknowledge this is a step change, however, the major driver is the current market capitalisation $A1.985bn (US$1.3bn) relative to transaction values for what we believe are inferior assets. The assets in clinical stage development by CU6 continue to show outstanding safety with good indications of efficacy supported by composition of matter patents. The valuation is determined from a revised DCF model supported by recent M&A in the radiopharmaceuticals space.
