I am neutral on GlycoMimetics (GLYC), as it has unanimous support from Wall Street analysts and an average price target that implies incredible upside potential. That said, the company is far from profitable and the path to get there is incredibly speculative.
GlycoMimetics is a biotechnology company focusing on the development of glycomimetic drugs for medical diseases in the area of carbohydrate biology. Its drug candidates include Galectin Antagonists, Uproleselan, GMI-1687, and Rivipansel. In particular, Uproleselan can be used to treat patients with acute myeloid leukemia (AML), a hematologic cancer that can prove to be life-threatening.
GMI-1687, an antagonist of E-selectin, is applicable for subcutaneous administration. Over the years, GlycoMimetics has designed numerous small molecule therapeutics to treat all kinds of cancers. The company was founded in 2003 and is based in Maryland.
Strengths
GlycoMimetics has a library of innovative bioscience products with promising solutions for various issues. The company has bright biotechnology experts who continue to develop and test new products that have the potential of gaining investor confidence. GlycoMimetics has a proven history of improving its revenue and sits on enormous cash reserves that allow it to continue its R&D operations.
The company’s main strength is its unique understanding of carbohydrate biology to create small-molecule therapeutics. These are proprietary programs that only GlycoMimetics has access to. In other words, they are the go-to providers for treatments of certain types of disorders and cancers.
With that said, the company does have a habit of burning through cash to continue running its research programs. This represents a layer of risk for investors.
Recent Results
GLYC had $102 million in cash and was debt-free in September 2021. This is compared to cash reserves of $137.0 in the same quarter last year.
The company’s research and development expenses increased to $13.3 million because of the increase in clinical trial costs. In terms of revenue, the company made $1.3 million in 2021.
Valuation Metrics
GLYC stock is very difficult to value, as it is far from profitable and has strong growth potential. The company currently trades at 121.62x revenue, which is well below its historical average of 170.36x.
The company has a very inconsistent track record and uncertain outlook, as it greatly depends on the success of its research and development projects and its product performance in clinical trials.
Wall Street’s Take
According to Wall Street analysts, GLYC earned a Moderate Buy analyst consensus based on two Buy, 0 Hold, and 0 Sell rating in the past three months. Additionally, the average GLYC price target of $9.00 puts the upside potential at 625.81%.
Summary and Conclusions
GLYC is a very speculative investment, as the company is far from profitable and has a very spotty track record. Furthermore, its path to profitability is entirely dependent on the performance of its research and development projects.
That said, the two Wall Street analysts that cover the stock are bullish on it, and the average price target implies that the stock could provide incredible returns for shareholders if the bull case plays out.
While this is certainly possible, the outcome is far from certain. The stock is risky enough that investors may want to look elsewhere when pursuing investments.
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