ASX healthcare stock PYC Therapeutics Ltd (ASX: PYC) has risen 22% over the past year.
It is a clinical-stage biotechnology company developing multiple drug candidates for rare inherited diseases.
The company has its HQ, lab facilities, and majority of staff based in Perth, WA, as well as personnel based in the US for clinical, regulatory, and manufacturing functions.
This past years gain hasn't come without volatility, as the healthcare stock has fluctuated considerably.
In just the past 6 months, it has swung between $0.80 per share and $1.70 per share.
However a new report from Bell Potter indicates it could be set to rise significantly in the next 12 months, supported a successful capital raise and healthy balance sheet.
Here's what the broker had to say.
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Why this healthcare stock is a speculative buy
Bell Potter pointed out in yesterday's report that PYC Therapeutics are conducting one of the largest single capital raises for an Australian pre-revenue biotech, raising $600-653m at $1.50/share relative to the $933m market cap prior to the transaction (prior close was $1.60/share).
Bell Potter said the transaction provides over four years of runway for the company to advance all four of its rare disease drug candidates through clinical development into CY30.
With the benefit of 4+ years of cash runway now at hand, the company has updated its latest development timeline expectations.
The broker also pointed out the company has a healthy balance sheet position of >$700m cash,
According to the report, PYC Therapeutics can take a more stepwise approach to its clinical development activities than perhaps it would have otherwise.
We have updated our model for the capital raise and revised development timelines in line with the latest expectations. Previously assumed licensing income is pushed out considering the formidable cash position. PYC has always adopted an ambitious, multi-asset strategy, and now it has the balance sheet capacity to execute for several years.
Healthy upside in tact
Based on these factors, Bell Potter has maintained its speculative buy recommendation on this ASX healthcare stock.
It also has a 12 month price target of $2.30 per share.
From yesterday's closing price of $1.495, this indicates an upside of 54%.
Elsewhere, the average one year price target from 4 analysts via TradingView is $3.70.
That indicates an even greater upside of nearly 150%.
