Seeking Alpha: With Cyclacel, The Waiting Is The Hardest Part

This has been a tough year to hold riskier biotechs, and Cyclacel (NASDAQ:CYCC) has been no exception as the shares have fallen by about a third since my last write-up on the company and more than 20% year-to-date. Some investors were definitely angered by the company's decision to launch another Phase II study in MDS instead of the expected pivotal Phase III study, but the shares were weak before that announcement. More likely, Cyclacel has found itself caught up in a "risk-off" move out of biotech and perhaps an increasing obsession with all things immuno-oncology.

Some readers will scoff at what I'm about to say, but I've always pursued Cyclacel from the value/expectation angle. I'm not all that positive on the company's odds of success (not many sub-$100 million market cap biotechs with Phase III oncology drugs see success), but the implied odds of success are indeed quite low and there are data to suggest that lead drug sapacitabine just may show a sufficient survival benefit in elderly AML and MDS patients to merit approval and use. Truing up my fair value estimate pushes my target down to $5 (from $6.50), but that still leaves considerable upside if the company's late-stage trials go well.

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With Cyclacel, The Waiting Is The Hardest Part