Is Kintara Therapeutics A Hidden Gem?

Key Points

• The stock has fallen since last year but rebounding.
• Earnings are negative, but analysts expect impressive positive, long-term growth.
• Recent product developments support long-term growth expectations.

At first glance, it might seem like Kintara Therapeutics Inc Nasdaq: KTRA would not be a good investment. After all, analysts gave the stock a HOLD rating after its Q3 earnings report in November. However, that rating alone is not enough to understand the full scope of possibility in its future, which suggest big things to come.

Recent Numbers are Disappointing But Not The Whole Picture

First of all, the stock has been in decline since December 9, 2022; it was a somewhat sharp fall. The biggest change occurred over a few days, from around $15 on Dec 9 to around $8 on Dec 14. At that point, the stock bounced back and leveled off before slipping a little to its current value, hovering around $7.50 per share.

But, again, it seems as though the stock may be stabilizing here. On top of that, even though the stock took a tumble, it is still roughly 25% above the 52-week low. More importantly, the stock is up nearly 25% over the last quarter, so even as its most recent decline was quite dramatic, the pending recovery could be just as intense. That said, the 52-week high is $42, so the stock has a bit of a climb, but from what we can extract from the analyst ratings, breaking through this range is almost certain.

And yes, KTRA's earnings are indeed in the negative. In fact, earnings for Q3 2022 are currently around -$3.50 (missing the consensus estimate by $2.00). However, current projections suggest earnings will grow to $0.07 by next year. That is an earnings boost of more than 100%, which is particularly attractive as it was on track from the improvement over the same value one year ago. As reported in the Q3 2021 earnings report, earnings per share came in at -$6.50. KTRA's next reporting date is February 10, 2023.

High Upside Potential Suggests KTRA Outlook Could Shift Dramatically

This is not the end of it, though. Analysts have also given the stock a consensus price target of $150. While this makes sense when comparing the historical data against projected earnings, the fact that it represents an upside of 1,921.56%—while earnings are still in the negative—is nothing short of astonishing. Stocks of this size and youth (its IPO launched in August 2020) do not tend to make such significant leaps quickly, especially after suffering such a notable decline. And that is what makes this stock worthy of its HOLD rating.

KTRA has a beta rating of 1.19, which means it is only slightly more volatile than the overall Standard & Poor's 500 index. This comes at a time when Kintara stock has been outperforming the S&P. Earlier in the month of December, for example, KTRA was up nearly 12% while the S&P was down about 0.16%. Of course, KTRA's value has dropped far more than the S&P, as a whole, this last year (approximately -72% vs. -16%), but the fact it is making up more ground speaks to its long-term potential.

How the Kintara Drug Pipeline Could Boost Stock Value

Kintara Therapeutis Inc is a small-cap, clinical-stage drug development company. Their main focus is anti-cancer therapies for treating cancer patients. The company has two late-stage, Phase III-ready treatments in the works. First, there is REM-001, a late-stage photodynamic therapy for treating cutaneous basal cell carcinoma nevus syndrome and metastatic breast cancer.

And secondly, they have VAL-083, which targets DNA to treat drug-resistant [solid] tumors (including glioblastoma multiforme), and also solid tumors (including non-small cell lung cancer and ovarian cancer).

With that in mind, Kintara recently received Fast-Track Designated status, from the FDA, for REM-001, in late November 2022. This is likely why the stock made a great leap forward, jumping from $3.50 (the 52-week low; and, effectively, the historical bottom) around that time. It may also be contributing to the dramatic positive outlook for KTRA stock. In addition, more than 40 successful Phase 1 and 2 clinical trials for VAL-083 (demonstrating anti-cancer activity) should help to boost interest in their brand and, of course, their stock.

In addition, VAL-083 is probably why the stock spiked again in mid-December, just a few weeks after receiving its FTD status for REM-001. On December 15, 2022, Kintara received an official Orphan Drug Designation (ODD) for Val-083. The ODD program gives “orphan” status to any drug intended to treat, diagnose, or prevent a rare disease that affects no more than 200,000 people. An ODD provides a drugmaker with developmental incentives like tax credits and seven-year marketing exclusivity, pending FDA approval.