California-based drug developer Kalytera Therapeutics (Kalytera Therapeutics Stock Quote, Chart TSXV:KALY) may be facing competitive headwinds going forward but the markets have yet to recognize the value in the company’s efforts so far, according to analyst Douglas Loe of Echelon Wealth Partners, who on Thursday reiterated his “Speculative Buy” rating and $0.30 target price.

Cannabinoid-focused drug development firm Kalytera made two announcements this week, one being the closing of a C$787,500 private placement and the other being the start of a new Phase I CBD clinical initiatives exploring food effects and cardiovascular side effect profile and drug-drug interactions.

Loe calls the new Phase I CBD testing conventional and not overly impactful on his investment thesis.

“Our investment thesis on KALY continues to balance two major offsetting risk factors, with highly positive interim Phase II GvHD data already available that greatly mitigates clinical risk for CBD’s utility in that market but with lingering financial risk that the new convertible debt only partially solves and only as a bridge to supporting the aforementioned Phase II GvHD program to final data and no further,” says Loe.

“We stand by our view that capital markets are not fully recognizing the value embedded in Kalytera’s Phase II accomplishments already (including the 2015 48-patient Phase II GvHD trial that was not funded by Kalytera itself) or in CBD’s prospects in this distinct medical market for which Kalytera has unique patent-protected development rights. Thera are certainly competitive headwinds on the horizon and Kalytera is not the only drug developer targeting GvHD, nor is it close to being the most advanced clinical GvHD developer we see on the horizon,” he says.

Loe is projecting 2023 revenue and EBITDA estimates of $5.0 million and negative $3.8 million, respectively, and 2024 revenue and EBITDA of $26.4 million and $17.4 million, respectively. His target price projects a 12-month return of 328 per cent at the time of publication.