Why this ASX 300 stock could be a buy after 'a breakthrough moment'

Clarity Pharmaceuticals Ltd (ASX: CU6) shares were on fire on Monday.

The ASX 300 biotech stock rocketed 25% to end the day at $3.57.

But if you thought you might be late to the party, think again. That's because Bell Potter believes the company may have just delivered what it calls "a breakthrough moment" and is tipping major upside for its shares from current levels.

Let's see what the broker is saying.

'A breakthrough moment'

Bell Potter's note has been looking at the ASX 300 stock's new abstract data, which was presented ahead of an upcoming conference presentation. The broker said:

The abstract of Professor Louise Emmett's upcoming presentation of Co-PSMA data was released over the weekend. The study compared the detection rate per patient between 64Cu-SAR-bisPSMA and 68Ga-PSMA11 in men with biochemical recurrence (BCR) of prostate cancer [..] The aim of the study was to prove that 64Cu-SAR-bisPSMA is a superior agent for the detection of BCR of prostate cancer in men with low PSA levels.

The results were compelling. Bell Potter highlights:

64Cu-SAR-bisPSMA positively identified lesions in 39 of 50 patients (78%), compared to 18 of 50 patients (36%) with 68Ga-PSMA-11 [..] The investigators concluded that 64Cu-SAR-bis-PSMA PET CT identified a statistically higher number of disease recurrences compared to 68Ga-PSMA 11 with a high true positive rate (p <0.0001).

What happens next?

Attention now turns to the AMPLIFY Phase 3 approval study, which is currently recruiting 220 patients. Bell Potter adds:

The stage is now set for a readout from the approval study for 64Cu-SAR-bisPSMA (AMPLIFY)… A similar true positive rate in the approval study is likely to warrant a highly differentiated label claim to currently marketed products for the detection of BCR, particularly in patients with low PSA levels.

Importantly, the broker also points out that supply of 64Cu is secured under long-term arrangements for the US market and that Clarity is well funded, with cash in excess of $226 million at the end of December.

Big potential returns for this ASX 300 stock

In response to the news, the broker has retained its speculative buy rating and $6.40 price target on the ASX 300 stock.

Based on its current share price of $3.57, this implies potential upside of almost 80% for investors over the next 12 months.

However, it is worth highlighting that its speculative rating means this would only be suitable for investors with a high tolerance for risk.