Goldman Sachs initiates neutral rating on CG Oncology stock with $42 target By Investing.com

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On Tuesday, Goldman Sachs initiated coverage of CG Oncology, which trades on NASDAQ:CGON, with a Neutral rating and a $42.00 12-month price target. The investment firm sees a potential downside of 12% from its current valuation. The focus of the evaluation is on CG Oncology’s oncolytic virus, cretostimozine, which is being developed to potentially transform the treatment landscape of non-muscle invasive bladder cancer (NMIBC).

Cretostimogen is specifically indicated for patients with high-risk, Bacillus Calmette-Guerin (BCG) non-responsive, high-risk, BCG-exposed, and intermediate-risk NMIBC. This virus has shown promising clinical data in several studies, particularly in high-risk BCG-naive patients. These include recent interim results from the pivotal Phase 3 BOND-003 study.

Goldman Sachs expects primary data demonstrating the efficacy of the 12-month BOND-003 study by the end of 2024, as directed by company management. These data are expected to impact other patient groups, such as high-risk BCG-exposed patients, with trial start expected in the second half of 2024, and relapsed intermediate-risk patients, with full enrollment expected in the second half of 2024. 2026.

The investment firm’s assessment of the market opportunity for cretostimogen at NMIBC presents a clear path for CG Oncology to achieve peak unadjusted sales of $2.4 billion. These predictions are based on a probability of success (PoS) of 75% for high-risk, BCG-naive patients, 50% for high-risk, BCG-exposed patients, and 50% for relapsed intermediate-risk patients.

Despite Cretostimogen’s potential, Goldman Sachs believes the company’s current valuation adequately reflects this opportunity. This assessment supports a neutral stance on the stock, suggesting that the market has already priced in the expected benefits of drug development and expected market penetration.

InvestingPro Insights

Investors tracking CG Oncology (NASDAQ:CGON) have observed some interesting movements in the stock’s performance and valuation metrics. CGON has enjoyed significant gains recently, according to InvestingPro data. 28.95% Total price return for the past month. This is consistent with the stock trading close to its 52-week high. 95.42% of this benchmark. These numbers suggest strong bullish sentiment among investors, which may be a reflection of the optimism surrounding the company’s clinical progress.

However, it is important to note that CGON has not been profitable over the last 12 months, as evidenced by its negative P/E ratio. -55.03 During the same period. Additionally, the company suffers from weak gross profit margins and reports gross profit margins as low. -18370.44%. These financial strength indicators paint a contrasting picture with recent price gains and highlight the speculative nature of the current investment environment surrounding CGON.

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