Our price target is $8/share. We value DRTS shares based on a whole-company discounted cash flow (DCF) analysis. Our model includes sales for Alpha DaRT in the most likely initial commercial indication, squamous cell carcinoma (SCC) of the skin without curative standard of care only, in the US and other key regions (EU, Israel, Japan). We assume high probability of success (PoS) in this initial indication (70%) given the strength of the data for Alpha DaRT to date. We run our DCF out to 2033, after which we assume 0% terminal growth. We utilize a 12% WACC discount rate.

We rate DRTS shares as High Risk, consistent with other pre-commercial, smid-cap biotech companies. Key risks include:
• Clinical risk. Alpha Tau’s lead candidate, Alpha DaRT, is a clinical-stage program in multiple indications and geographies, though it does have marketing authorization in Israel. If efficacy and/or safety of ongoing or planned studies fail to meet our expectations, shares could fail to meet our price target. 

• Regulatory risk. Alpha Tau plans to commercialize Alpha DaRT in multiple geographies upon receiving FDA authorization. If the company fails to receive FDA authorization and additional studies or updates to the manufacturing process are required, shares could fail to meet our price target.   

• Manufacturing risk. Manufacturing of Alpha DaRT requires use of radioactive materials. If sufficient supply cannot be manufactured or transported, shares could fail to meet our price target.

• Commercial/competitive risk. If approved, Alpha Tau’s products could face competition from other local or systemic radiation therapies. As such, the shares could fail to meet our price target.