A Look at Celcuity (CELC) Valuation After FDA Review Triggered by VIKTORIA-1 Breast Cancer Trial Results

If you have been watching Celcuity (CELC), the recent surge may have turned your head. The company just announced that the FDA has agreed to review its New Drug Application for gedatolisib, an investigational treatment for HR+/HER2- advanced breast cancer, under the Real-Time Oncology Review program. This accelerated review, granted on the back of breakthrough efficacy results from the Phase 3 VIKTORIA-1 trial, signals meaningful progress for Celcuity and brings the drug closer to potential approval.

This news came at a time when momentum for Celcuity had already been building. Over the past month, shares have climbed by nearly 36%, with gains accelerating to almost 384% for the past three months and over 310% in the past year. These patterns reinforce a market that has started to re-rate the stock upwards, particularly as pivotal clinical milestones have converted into concrete regulatory events. For longer-term holders, the recent catalyst adds fresh energy atop a five-year rise of over 1,100%, all while revenue and net income growth rates have moved sharply higher on an annual basis.

As we look at 2024’s rally and the remarkable swing in sentiment, the real question is whether Celcuity shares still have room to run or if the market has already baked in all that potential future growth.

Price-to-Book of 59.8x: Is it justified?

Celcuity is currently considered expensive when using the price-to-book (P/B) ratio, which stands at 59.8 times compared to the biotech industry's average of 2.2 times and peer average of 3.1 times. This high P/B ratio suggests investors are paying a significant premium over the company's net assets.

The price-to-book multiple is a standard measure for valuing companies in asset-light and research-driven sectors such as biotechnology. It indicates how much investors are willing to pay for each dollar of net assets or equity. For early-stage or unprofitable biotechs, this ratio can be elevated if the market expects transformative future earnings growth or breakthrough drugs.

This P/B multiple implies substantial optimism about Celcuity's future prospects. However, currently, the company is unprofitable and its losses have actually grown over the past five years. While recent clinical and regulatory milestones may be fueling enthusiasm, the valuation depends on the company delivering dramatic improvements in profitability soon.

Result: Fair Value of $62.53 (OVERVALUED)

See our latest analysis for Celcuity.

However, setbacks in FDA approval or disappointing follow-up trial results could quickly undercut the optimism that is fueling Celcuity’s elevated valuation.

Find out about the key risks to this Celcuity narrative.

Another View: What Does the SWS DCF Model Say?

While the earlier valuation method suggests Celcuity is richly priced, the SWS DCF model paints a sharply different picture. According to this approach, shares may actually be undervalued. Can both views be right?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Celcuity to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Celcuity Narrative

If you see the story differently or want to dig deeper into the numbers, you can easily analyze the data and build your own perspective in just a few minutes. Do it your way.

A great starting point for your Celcuity research is our analysis highlighting 2 key rewards and 2 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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