Seeking Alpha: Should Traders Try To Play The Odds With Cyclacel?

To be very clear from the get-go, I'm not bullish on the long-term prospects for Cyclacel (CYCC), nor those of its lead drug sapacitabine. I think the odds favor a negative outcome for the company's Phase III trial (SEAMLESS), and I think the remainder of the pipeline is unlikely to generate much investor enthusiasm in the absence of a licensing agreement.

That said, I'm surprised that Cyclacel trades where it does. By my math, Cycalcel trades with implied odds of sapacitabine success of less than 12%. While that may ultimately prove prescient, it seems out of line with the implied odds that other controversial oncology companies like Aeterna Zentaris (AEZS), Northwest Biotherapeutics (NWBO), ImmunoCellular (IMUC), Dendreon (DNDN) and Vical (VICL) have enjoyed at various points in their developmental histories.

This leads me to wonder if Cyclacel will run up into the interim analysis (estimated to occur in 2014) of the Phase III study. This is not a stock that I'd buy with the intention of holding for any extended period of time, but even just 15% to 20% assumed odds of success would suggest a target of around $4 to $5.40.

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Should Traders Try To Play The Odds With Cyclacel?