Stock of the day: Clarity Pharmaceuticals

(AI video summary)

This video was created on 29 May 2025 for IG audiences by ausbiz.

ASX code: CU6

Phase three trial milestone drives gains

Clarity Pharmaceuticals confirmed it dosed the first patient in its phase three amplified trial, sending shares up 10% in morning trading. The diagnostic trial focuses on patients with biochemical recurrence of prostate cancer, aiming to detect recurrence earlier and more accurately than current methods.

The company is gathering data to support a new drug application with the United States (US) Food and Drug Administration (FDA), marking a significant step towards commercialisation. Clarity's copper-based technology binds to cancerous cells in the prostate, providing more efficient and accurate detection.

Clinical trial results show promising outcomes, with some patients reportedly cleared of prostate cancer. The company received fast-track approval from the FDA, enabling constant communication with regulators.

Investment risks remain high

Despite the positive news, analysts emphasise the inherent risks in biotech investing. Phase three trials carry a 40% failure rate and typically take three to four years to complete.

Unlike earlier safety-focused phases, phase three trials examine both efficacy and longer-term side effects. The Australian market saw these risks with CSL Limited, which failed its phase three trial for CSL112 after investing approximately $1 billion.

Investment outlook

Analysts maintain a speculative 'buy' rating on Clarity Pharmaceuticals, acknowledging both the technology's transformational potential and pre-revenue business status. The share price previously reached $8 before settling as investors reassessed valuations.

For biotech exposure, analysts suggest treating such investments as high-risk speculative plays. Alternative approaches include waiting for capital raisings or considering charitable donations to cancer research organisations for tax benefits while supporting scientific advancement.