RepliCel is has triple-digit upside, says Echelon Wealth Partners

A pullback in shares of RepliCel Life Sciences (RepliCel Life Sciences Stock Quote, Chart, News: TSXV:RP) isn’t dampening Echelon Wealth Partners analyst Douglas Loe’s bullish take on the stock.

This morning, RepliCel announced it had signed two service partnerships with European firms (AMI, an Austrian medical tech manufacturer and AoT, a Swiss-based contract developer) to get the company’s commercial-grade RCI-02 dermal injector prototypes manufactured and tested.

“The execution of these agreements covers what we believe to be the final stages needed to prepare RCI-02 for a market authorization application in the form of a CE mark in Europe,” said CEO Lee Buckler. “With our first functional protoypes scheduled for this summer, we continue to work toward having this device ready for a CE mark application and in the hands of a licensing and commercial partner next year. Meanwhile, while we had originally hoped to receive some of our clincal data in February, we remain confident all three clinical data sets will be received and announced very shortly and all still before the end of the quarter.”

Loe framed today’s news with the recent financing activites in a research update to clients today.

“Neither firm has an overly large footprint in Canadian medical technology development per se, but as background, AMI specifically does have expertise in developing medical technologies across a number of specialties, including but not limited to urology and laparoscopy,” says the analyst. “RepliCel’s dermal injector does not overlap with these target markets of course, but its therapeutic niche (cell delivery in regenerative medicine) is one for which specific expertise is not widely available anyway. But regardless, we believe AMI through prior contract flow has relevant expertise in navigating regulatory procedures for CE Mark documentation and submission and this expertise is most relevant to RCI-02 European commercialization. AoT brings different expertise to RCI-02 development, since it is an electronic design and development developer, specializing in industrial, medical and space applications. AoT has experience in developing medical electronics, and has for example worked with Sequana Medical’s (Private) implantable ALFApump (a fluid pump for the collection of excess fluid in the abdominal cavity) and other complex nanotechnology-based handheld device and in so doing, should have relevant experience to advise on RCI-02 design elements pre-CE Mark filing. New manufacturing relationships while certainly positive to our RCI-02 commercial outlook are not overly material to our investment thesis or to our current valuation that already assumed RCI-02 approval/launch in Europe in 2018.”

Loe says his view on RepliCel’s financings activities is that the dilutive impact of new capital structure is offset by reduced financial risk.

In a research update to clients today, Loe maintained his “Speculative Buy” rating and one-year price target of $2.15 on RepliCel Life Sciences, implying a return of 115 per cent at the time of publication.

Disclosure: RepliCel Life Sciences is an annual sponsor of Cantech Letter