Maxim cuts Can-Fite Biopharma to hold; removes PT
Maxim Group downgraded Can-Fite Biopharma (NYSE American:CANF) to “hold” from “buy” and removed its previous $7 price target after the company announced a $5-million registered direct offering. The stock was quoted at $1.58, down 36 cents, in afternoon trading on March 9.
“While we anticipated Can-Fite would need to raise capital, we did not anticipate the added dilution announced in today's raise and the potential impact of raising too little capital, which sets up additional dilution,” writes analyst Jason Kolbert.
“Based on our assumptions, this gives the company an additional quarter or maybe two of operating capital before they need to raise again,” he added. “Factoring in a series of additional dilutive raises has the effect to lower our target valuation to a level that does not justify a buy rating.”
Based on an assumed burn rate of $21-million in 2018 to run the clinical programs versus estimated cash of about $8-million to $10-million and a lack of near term catalysts, “our concerns are heightened further,” Mr. Kolbert said.
“As such, we believe it's prudent to lower our rating to hold from buy as the company focuses on raising capital to execute its clinical programs,” he said. “With additional funding in hand, we would be compelled to revisit our thesis.”