The company needs to be wary of its burn rate, but Canaccord Genuity analyst Neil Maruoka sees plenty of upside in ProMetic Life Sciences (TSX:PLI).
This morning, PromMetic reported what it described as positive interim six-month clinical data from its continuing pivotal IVIG phase 3 clinical trial in patients suffering from primary immunodeficiencies following review of the data by the Data Safety Monitoring Board, which confirmed no significant safety issues and that efficacy appeared to be comparable with existing commercial IVIG (intravenous immunoglobulin) products.
“These positive interim clinical results from our pivotal IVIG phase 3 trial will enable us to complete the clinical portion of our new drug submission with Health Canada,” said CEO Pierre Laurin. “We look forward to eventually commercializing our plasma-derived IVIG in Canada initially and contributing to Canada’s self-sufficiency with regards to plasma-derived therapeutics.”
Maruoka says this development could lead to more noteworthy news.
“Generally, we view interim data to be not particularly noteworthy; however, we expect the six-month data from this trial will be sufficient to support a New Drug Submission (NDS) with Health Canada,” the analyst explains. “Although the timing of a potential approval is unclear, we believe ProMetic could target a commercial launch for IVIG late next year or early 2019. The Phase III interim data showed that ProMetic’s IVIG was safe and non-inferior to similar approved products, which we believe could support approval. If approved, IVIG could be ProMetic’s second commercial plasma-derived therapeutic (assuming Ryplazim is approved on April 14, 2018), driving margin expansion and demonstrating the power of ProMetic’s protein extraction technology.
Maruoka remains bullish on ProMetic, but says he will be watching one risk factor carefully.
“We believe that the key risk for ProMetic is its cash burn,” he says. “While a Priority Review voucher likely has some value and there is the potential for non-dilutive licensing deals, we are nonetheless looking for a reduced burn rate ahead of the expected approval of Ryplazim early next year.
In a research update to clients today, Maruoka maintained his “Buy” rating and one-year price target of $4.00 on ProMetic Life Sciences, implying a return of 182.7 per cent at the time of publication.
Maruoka thinks ProMetic will generate EBITDA of negative $83.2-million on revenue of $39.5-million in fiscal 2017. He expects those numbers will improve to EBITDA of positive $37.5-million on a topline of $150.4-million the following year.