IL1RAP Platform Advancements And Strong Cash Runway Will Support Long Term Biotech Upside

Catalysts

About Cantargia

Cantargia is a biotech company developing IL1RAP targeted antibodies for oncology and inflammatory or autoimmune diseases.

What are the underlying business or industry changes driving this perspective?

• The move toward biomarker guided oncology, exemplified by Cantargia’s IL1RAP assay and Fast Track Designation in high IL1RAP PDAC, can support premium pricing and higher peak revenues as payers increasingly reward differentiated, patient selected therapies.
• Advancing nadunolimab into a pivotal PDAC trial in a setting with few effective treatments positions Cantargia to benefit from rising global investment in pancreatic cancer innovation, which would be expected to materially lift long term revenue and earnings power if the program succeeds.
• The Otsuka partnership, including substantial milestones and double digit royalties on CAN10, provides non dilutive funding potential as that asset progresses, which should improve net margins and reduce equity dilution risk versus peers.
• Expansion of the IL1RAP platform into bispecifics and ADCs through CAN14 and CANxx taps into sustained demand for next generation biologics in inflammation and oncology, creating multiple shots on goal that can diversify and grow future revenue streams.
• The strong cash position and reduced R&D spend after the nadunolimab and CAN10 ramp down provide a cash runway into 2028, giving Cantargia time to reach major value inflection points that can enhance earnings visibility without immediate pressure to raise dilutive capital.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Cantargia's revenue will decrease by 69.0% annually over the next 3 years.
• Analysts are not forecasting that Cantargia will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Cantargia's profit margin will increase from 45.3% to the average SE Biotechs industry of 18.0% in 3 years.
• If Cantargia's profit margin were to converge on the industry average, you could expect earnings to reach SEK 1.7 million (and earnings per share of SEK 0.01) by about December 2028, down from SEK 139.9 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 2252.1x on those 2028 earnings, up from 7.2x today. This future PE is greater than the current PE for the SE Biotechs industry at 31.4x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.14%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The TRIFOUR study in triple negative breast cancer failed to improve objective response rate versus chemotherapy alone, and if the upcoming overall survival data in that indication or in other tumors are also negative, confidence in nadunolimab as a broadly effective IL1RAP targeted therapy could erode and limit the long term revenue opportunity.
• Cantargia has not yet secured funding or finalized the design for a costly pivotal PDAC trial, and prolonged difficulty accessing capital markets or a lack of new partnerships could delay trial initiation beyond 2026, slowing time to potential approval and putting long term earnings growth at risk.
• The cash runway into 2028 explicitly excludes the pivotal PDAC program and assumes no Otsuka milestones, so if R&D spend needs to rise faster than expected or milestones are delayed, Cantargia may face earlier than anticipated dilution or funding constraints that pressure net margins.
• While IL1RAP is a promising biomarker, PDAC and autoimmune diseases are highly competitive spaces with rapidly evolving standards of care, and if rival therapies in PDAC or next generation autoimmune biologics deliver superior efficacy or safety, Cantargia could struggle to win share, which would cap future revenue growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of SEK10.5 for Cantargia based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK14.0, and the most bearish reporting a price target of just SEK7.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be SEK9.2 million, earnings will come to SEK1.7 million, and it would be trading on a PE ratio of 2252.1x, assuming you use a discount rate of 5.1%.
  
• Given the current share price of SEK4.04, the analyst price target of SEK10.5 is 61.6% higher. Despite analysts expecting the underlying business to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.