Profound Medical is a Buy, says Beacon Securities

Medical device company Profound Medical (Profound Medical Stock Quote, Chart, News: TSXV:PRN) has two products that it plans on commercializing in the near future, both of which are giving the company “significant upside potential,” says analyst David M. Kideckel of Beacon Securities in a coverage initiation which rates PRN a “Buy.”

Profound is currently conducting a Phase 2 trial of its lead product, the Tulsa-Pro minimally invasive technology for the treatment of prostate cancer, while its second product, the Sonalleve MR-HIFU high-intensity focused ultrasound, was purchased from Philips in July of 2017 and is currently on sale in the United States.

Kideckel says both of Profound’s products are innovative technologies in their fields.

“We believe the TULSA-PRO offers the best-in-class treatment on the market today for the ablation of prostate tissue,” says Kideckel in a coverage launch on Tuesday. “If the trial results proceed as we expect, we believe the company will have approval in 2019 and will be in a position to commercialize the product in the US subsequent to that.”

“We believe that Profound has significant upside potential especially as it leverages its partnerships with Siemens and Philips, who distribute their two products into all areas they sell in to,” says the analyst. “Based on our analysis, we expect that Profound will need to raise up to ~$30 million by the end of 2018, in order to fully commercialize its TULSA-PRO and Sonalleve platforms. This amount was derived by assuming a $30 million equity raise at $1.00.”

Yesterday, Profound announced a $20.0 million bought deal financing round underwritten by Canaccord Genuity Corp., expected to close on or about March 20 of this year.

Kideckel estimates total revenues from TULSA-PRO for 2017 including disposables at ~$2.1 million USD and 2018 revenues at $6.4 million USD. The analyst has given FY17 revenue and EBITDA estimates for PRN at $5.09 million and -$6.14 million, respectively, and FY18 revenue and EBITDA estimates at $12.54 million and -$3.49 million, respectively.

The analyst gives a “Buy” recommendation in his initiating coverage of PRN and a 12-month target price of $3.10, representing a 203.9 per cent return at the time of publication.