Profound Medical (TSX:PRN) has a medical device in clinical trial that could become the standard of care in the treatment of prostate cancer, says analyst Rahul Sarugaser of Paradigm Capital, who claims that if successful in its trial, the TULSA-PRO procedure for the ablation of prostate tissue could redefine the market.
Last month, Toronto-based clinical stage medical device company Profound Medical presented interim data from its clinical trial at the annual meeting of the American Urological Association, showing median PSA reduction of 95 per cent, with 95 per cent of patients (109 out of 115) meeting the PSA threshold endpoint (of 75 per cent reduction).
In a research update to clients on Wednesday, Sarugaser calls the results “an important milestone, as the data now meets one of two primary endpoints, efficacy.”
On the other front, namely, safety, serious adverse events presented in seven per cent of patients, leading Sarugaser to believe that PRN will see strong safety data when it is presented later this year.
“Given the strength of the TULSA-PRO efficacy data presented at AUA, we are rolling PRN’s valuation forward to our 2018 year-end projection,” says the analyst. “This adjustment assumes good final trial data, so we have handicapped our $485 million valuation by 80 per cent to account for the modest risk of PRN not seeing the safety outcomes we expect. As such, we derive a valuation and target price of $4.00 (rounded from $4.03). We maintain our ‘Buy’ rating, which continues to be a clear Q2 Top Pick.”
Sarugaser also notes that management has indicated plans to graduate both of the company’s stock listings, with a move from TSX Venture to TSX senior board scheduled for late 2018 and a shift from OTC to the NASDAQ planned for early 2019.
The $4.00 target price represents a projected return of 288 per cent at the time of publication.