Cidara Therapeutics (CDTX): Evaluating Valuation After Breakthrough Therapy Status, BARDA Funding, and Phase 3 Expansion

Cidara Therapeutics (CDTX) announced that its lead antiviral, CD388, has moved rapidly into Phase 3 after receiving FDA Breakthrough Therapy status. The company also secured up to $339 million in BARDA funding.

See our latest analysis for Cidara Therapeutics.

Momentum around Cidara Therapeutics has been impossible to miss, with the 282% year-to-date share price return and astonishing 673% total shareholder return over the last year. After a string of positive updates, including the broadened Phase 3 trial, a $339 million BARDA award, and signs of strong regulatory support, investors clearly see both near-term and longer-term potential in the stock that has dramatically outpaced much of the biotech sector.

Curious which other healthcare stocks are attracting attention after breakthroughs and bold clinical progress? It might be the right moment to check out See the full list for free.

But amid such a rapid surge in valuation, is the market underestimating Cidara Therapeutics’ future growth? Or has the stock’s recent rally already priced in all the upside for new investors?

Price-to-Book of 7.8x: Is it justified?

Cidara Therapeutics currently trades at a price-to-book ratio of 7.8x, which is significantly higher than the average for both its biotech peers and the broader industry. With the last close at $104.39, the current valuation looks steep relative to comparable companies.

The price-to-book ratio compares the market value of a company to its book value, providing investors with an idea of how much they are paying for the company's net assets. This metric is especially important for biotech firms like Cidara, as it reflects market optimism about the company’s ability to turn research and development into future profits.

At 7.8x, Cidara’s price-to-book is markedly higher than the US biotech industry average of 2.5x and its peer average of 4.4x. This premium suggests that the market is optimistic about the future. However, the valuation likely factors in significant expectations for revenue growth and success in upcoming clinical milestones. With no meaningful revenue yet and continued operating losses, the high ratio may be difficult to justify until those expectations are met.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book of 7.8x (OVERVALUED)

However, setbacks in clinical trials or delays in regulatory approval could dampen investor enthusiasm and put pressure on the lofty valuation going forward.

Find out about the key risks to this Cidara Therapeutics narrative.

Build Your Own Cidara Therapeutics Narrative

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A great starting point for your Cidara Therapeutics research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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