PMV Pharma is a clinical-stage pharmaceutical company that is focused on developing small molecule therapies that target p53 and mutations to improve the lives of cancer patients. The company is headquartered in Cranbury, New Jersey.
I am neutral on PMV Pharma (PMVP) because both Wall Street’s bullishness on the stock and its strong growth potential are offset by its lack of profitability and speculative nature. (See Analysts’ Top Stocks on TipRanks)
Strengths
PMV Pharma is experiencing steady progress in the phase 1/2 trial of its first-in-class tumor-agnostic p53 reactivator candidate, PC14586, which is expected to result in positive outcomes for cancer patients.
The pharmaceutical company has also activated 12 clinical trial sites in the country that comprise top oncology centers. It has also started the construction of new corporate headquarters and labs in Princeton, New Jersey.
Recent Results
PMV Pharma’s second-quarter report for 2021 announced a net loss of $24.5 million for the six months ended June 30, 2021, compared to $15.2 million for the six months ended June 30, 2020.
The company incurred research and development (R&D) expenses of $15.2 million for the first and second quarters of 2021, compared to $11.8 million of R&D expenses incurred in the same period last year. The increase was attributed to a higher headcount, as well as higher clinical expenses related to the development of PC14586, the pharmaceutical company’s lead drug candidate.
The company’s general and administrative expenses stood at $9.6 million for the first and second quarters of 2021, compared to $4 million for the same period last year. The increase was primarily due to the costs associated with building the necessary infrastructure for running a public company.
PMV Pharma ended the second quarter of 2021 with $339 million in cash, cash equivalents, and marketable securities as compared to $361.4 million in the fourth quarter of 2020.
In addition, net cash used in operations was $22 million for the six months ended June 30, 2021, compared to the $15 million for the same period last year.
Valuation Metrics
PMV Pharma’s stock is very difficult to value, given that it is running up massive losses. It currently trades at 3.3x book value and is not expected to turn a profit for the foreseeable future as it waits for the results of its clinical trials.
Wall Street’s Take
Turning to Wall Street, PMV Pharma earns a Strong Buy consensus rating based on four Buy ratings and one Hold rating in the past three months. Additionally, the average PMV Pharmaceuticals price target of $59.25 implies 155% upside potential.
Summary & Conclusion
PMV Pharma may have a lot of upside potential as its share price is near 52-week lows. Also, if its clinical trials work out in its favor, the stock could shoot significantly higher.
Furthermore, Wall Street analysts are overwhelmingly bullish on it, implying that there is at least a reasonable chance that its products will end up being very profitable.
That said, investors should keep in mind that the company is expected to run heavy losses for the foreseeable future and that the outcome of its clinical trials is far from certain.
As a result, it is a highly speculative investment, and investors may want to approach it as one.
Disclosure: At the time of publication, Samuel Smith did not have a position in any of the securities mentioned in this article.
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