FTT relative valuation suggests fair value of around 20c

FTT currently has a market cap of approx $40m. I consider this to be too cheap. One way to arrive at this conclusion is to compare the market cap of FTT with other ASX listed biotech companies with a lead candidate at a similar level of development. The cut-offs that I have used is Phase 1 complete, Phase 3 not yet started. So effectively companies that are in or around the Phase 2 mark.

Please note this does not consider the size of the commercial opportunity or the likelihood of clinical success. These are considerations for another post when I have more spare time.

The relevant comparable companies that I can find in order of valuation are shown below. I'm sure I am missing several but the list is long enough to be informative. Also please note I've left out a few companies which are obvious scams and so aren't a credible comparison.

* PAR. $80m market cap. Most advanced candidate is PPS which is in Phase 2. Results expected 4q18.
* IMU. $97m market (post raise). Phase 2 Her-Vaxx results due 2021 and Phase 2 Her-2 results due end 2020.
* OPT. $100m market cap. OPT-302 in Phase 2. Results expected early 2020.
* IMM. $110m market cap. Efti in Phase 2. Results expected 2019.
* CYP. $130m market cap. Phase 2 in cardiovascular disease expected to start in 2h18.
* IVX. $175m market cap. Plans for a phase 2 in prostate cancer yet to be announced.
* BNO. $260m market cap. BNC210 in Phase 2 trials for PTSD (data expected 2h18) and agitation (just commenced).
* NEU. $275m market cap. Rett Phase 2 complete and planning underway for Phase 3 which likely starts in 2019.

So the market cap range suggested by comparable companies for FTT is $80-$275m. I would argue that given FTT is a mere 3 months away from reporting Phase 2 results the fair market cap should be in the upper half of the range. Supporting this theory is the overall healing data from the trial to date which shows good separation from the theoretical control which means we have a very credible signal that our therapy is working which isn't the case for almost all of the comparable companies listed above.

So if we assume FTT deserves to be valued in the middle of the above range (which I don't find to be an aggressive assumption at all) then this would imply a $180m market cap as fair value. This would equate to a share price of around 20c. Even if you want to be a complete scrooge and say FTT should be at the bottom of the range than this would imply a 10c share price.

Management/directors have been very happy to be paid in options with 11c strike price which is a good sense check that company insiders believe the true value of the company is comfortably above 11c.

Again this "analysis" doesn't consider the size of the commercial opportunity which is obviously an important variable. If I have time at a later date I can post something on this topic as well.

Hopefully shareholders find this useful information.