Roth Capital Partners is initiating coverage of Cybin Inc. with a Buy rating and $10/share price target. Cybin develops alternative formulations and versions of existing psychedelic drugs.
Roth Arrived at their 12-month price target of $10/share (USD) by assessing the after-tax, risk-adjusted NPV of potential future cash flows from the TRD indication and including a technology value for earlier programs. The probability-adjusted, fully taxed (21%) NPV (15% discount rate) of potential cash flows through 2035 is $2B or $9/share, in our calculation. Adding $200MM ($1/share) estimated technology value yields $2.2B or $10/share for the company, corresponding to our 12-month price target. Factors that could impede shares from reaching our price target include failure of Cybin’s drugs to demonstrate significant efficacy benefit or found to be unsafe, leading to the discontinuation of the programs.